Highlights
Ukraine has established a route through Poland and another route through Romania to export grain. The problem is Ukraine’s rail system operates on a different gauge than Poland’s, so the grain has to be transferred to different trains at the border where there are not many transfer or storage facilities.
Grain to Romania involves transport by rail to ports on the Danube River and loading grain onto barges for sailing towards the Black Sea port of Constanta, a complex and costly process.
Ukraine is in talks with Baltic States to add a third corridor for grain exports to the Baltic Sea.
At the start of the war, Constanta port’s infrastructure had about 700 rusty hopper cars blocking tracks and the rail yard rehabilitation works were stalled. Since then, Romania’s state-owned rail freight company has removed around half of the junk cars and has started rehabilitating 35 rail lines in the port, a US$42 million investment. It is also working on rehabilitating both wide and regular gauge railroads connecting Ukrainian territory with Romania’s sea and Danube river ports.
As an EU member, Romania will use EU funds for dredging the Port of Constanta to improve berth depth and to add 17 loading berths in the longer term. Port capacity is up 10-11% so far this year.
Ukraine is the world’s fourth-largest grain exporter and it says there are some 30 million mts of grain stored in Ukrainian-held territory which it is trying to export via road, river and rail.
Global Times reports China’s winter wheat harvest is 78.5% complete with “bumper output.” This is the second confirmation in two days that China’s winter wheat crop was not “the worst ever” as the market was pricing all spring.
Cargill has announced it will close its rapeseed crushing plant in Hull, United Kingdom, by the end of the year, citing “current market conditions.”
Although rapeseed plantings in England this year are expected to be up 17% from a year ago, they are still just half of what the rapeseed acreage was ten years ago. The plant has a daily capacity to crush 750 mts of rapeseed.
July crude oil traded down more than $3 yesterday morning to $117.47, the lowest price since last Tuesday. In the afternoon, it came roaring back to trade $1.60+ higher for the day before settling up about 25 cents. The dollar index was up more than one full point on the expectation the Federal Reserve will increase interest rates on Wednesday afternoon 50 basis points (a half percent) or as much as 75 basis points. As interest rates go higher, more people want to own US dollars. A strong dollar usually sends crude oil lower. By the end of the trading day, the market decided that a $5 swing deserved some evening-up and July crude settled up 26 cents a barrel at $120.93. July crude oil options expire Friday.
Aside from weather, there was not much news for corn and beans, so the sharply higher dollar sent corn and beans tumbling. Corn came back to settle mixed because the hot and dry forecast could impact corn, but will make very little difference on the beans this early in the growing season. Wheat traded 10 to 25 cents higher yesterday as the Russian wheat crop is struggling a bit due to a lack of water. Heat in Western Europe was also supportive for wheat. The Russian winter wheat crop is 70% of Russia’s total wheat crop and it is made or lost in June. Harvest will start in two weeks.
Below is the Weekly Crop Progress Report issued Monday afternoon.
Export Inspections Tracker
Market Data
This morning:
Crude oil is at $121.71, up $0.78
The dollar index is at 104.88, down 0.20
July palm oil is at 6,018 MYR, up 27. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.
December cotton is at $122.49, down $0.32 per cwt. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.
July natural gas is at $8.561, down 0.048. The contract high was made June, 8th at $9.664. Natural gas is the primary cost to manufacture nitrogen fertilizer.
July ULSD is at $4.3078 per gallon, up 0.0244. The contract high was made June, 10th at $4.5135. ULSD stands for Ultra Low Sulfur Diesel.
Rain Days Update
The Western Corn Belt has 2 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 more rain daysthan yesterday.
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days