Government policies and logistics could weigh heavily on Black Sea exports in '24

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There is an early weather market making some noise for soybeans and corn in Brazil and funds making waves in the canola and wheat markets; however, there are some developments around the Black Sea region that may not be getting as much coverage that could also have big impact on crop prices next year.

Neil Townsend, market analyst with GrainFox, explains the Brazilian soybean crop is possibly delayed going in with dry conditions persisting, but much can change this early in their growing season. It may end up being a non-issue by the end of the season, Townsend says. A delayed soybean planting season could mean the safrinha corn crop goes in late, too, but much remains to be seen on that front.

Statistics Canada will be out Monday with its 2023 production estimates, but Townsend would be surprised if the numbers posted end up really shifting anything on the price side. Still, there is a good news story with strong canola crush in Canada, even if export figures are down.

That catches us up to what’s happening here and there, but Townsend says there’ve been several developments in Ukraine and the Black Sea shipping corridor that need discussed. (More below)

First of all, persistent stormy, terrible weather has really screwed up logistics, even damaging some port infrastructure in Crimea, which is occupied by Russia. That said, the region has posted some aggressive exporting figures (suspected to be stolen grain from the occupied parts of Ukraine).

With all that grain movement, the latest discussion is now turning to export bans of certain crops, as Russia tallies up its balance sheet. “They had a very rough finish to their spring wheat crop, both quality and quantity wise. And you can see that, in part by the country just directly below them, Kazakhstan also had a very rough finish for their spring wheat crop,” Townsend says, leading many to speculate that supplies are very tight for the region — a situation that will need closely monitored over the next few months.

Looking to Ukraine, analysts in that region are concerned that government policy changes may compromise the ability of Ukraine to have free-flowing exports, where the government has de facto control of grain supplies.

“Whenever the government’s in control of something like that, I mean, you lose transparency, you lose efficiency, and… the farmers get crunched,” Townsend says, which could be a disincentive to farmers in Ukraine to put the incredible effort in under adverse conditions and circumstances.

“They’re already facing a lot of hardship, and then they’re expected to have a tax scheme that works against them, or export scheme that works against them?” he says. All of this leads to significant consequences with the possibility of huge implications for the 2024 crop.

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