Interactive: Ukraine-Russia conflict shakes agriculture supply chains, raises food security concerns

As the global leaders fret about food inflation, Russia is preparing to reap one of its largest-ever wheat crops, but the country is likely to show a sharp year-on-year fall in shipments for the first two months of the marketing year as larger vessels avoid the country's Black Sea ports, according to traders. "The surplus is there, the bottleneck is execution," one trader said. "July to August [will be] rather modest shipment months in comparison with the potentially great crop," said Russian agriculture consultancy IKAR, putting Russia's 2022 crop at 87 million mt, of which 41 million mt would be available for export. To achieve the export potential assessed by IKAR, Russia would need to export an average of 3.4 million mt a month, but three market participants told S&P Global Commodity Insights that it's unlikely for Russian exporters to ship more than 3 million mt a month. For comparison, Russia produced 75 million mt in the 2021-22 marketing year (July-June), with exports totaling 33 million mt, according to the US Department of Agriculture's most recent report. However, Russia's grains exports tend to be concentrated at the start of the marketing year and they have sometimes exceeded 5 million mt/month. "Russia has failed to do more than 3 million mt per month over the last three months [March to June] mainly due to freight shortages out of Russia, [issued with] credit lines and payments ... what's different for July to August?" a second trader asked. "July to August export availability is way less than the [upcoming] demand ... the market will realize it in next 15 days." The country will account for 18% of globally traded wheat in 2022-23, according to the USDA. In the department's estimates, that would partly compensate for a 9 million mt year-on-year decline in wheat exports from Ukraine, where deep sea ports have been closed since Russia's invasion began in end-February. Russia's challenges were evident in the most recent tender by GASC, Egypt's state grains board, which was the first of the 2022-23 marketing year. GASC, which is one of the world's largest wheat buyers, received 16 offers, but just three from Russia. It accepted eight offers – totaling 465,000 mt of wheat – including all of the Russian ones. Wheat is typically sold to GASC in 60,000 mt parcels on an FOB basis, with the board holding a separate tender for the freight. However, the Russian wheat offered in this tender was offered on a delivered basis, highlighting the reluctance of many shipowners to visit Russian ports. This reluctance is greatest among the owners of Panamaxes, and their larger ships are preferred for the longer routes. "Handy and supra are feasible at a premium ... for everything Panamax, they will be struggling," the first trader said.

CFR China soybean basis dropped by 50 cents in a week China demands remain weak Soybean prices for July shipment to China fell 4.7% in the past week, tracking Chicago Board of Trade futures lower amid faster soybean planting in US and declining FOB Santos prices led by active farmer selling in Brazil. The market was assessed by Platts at $728.63/mt on June 15, according to S&P Global Commodity Insights data. The July CBOT soybean contract reached its highest, at $17.84/bushel, on June 10 after the WASDE report released by USDA. A higher than expected export volume of soybeans in US for marketing year 2021/22 supported market talk of tighter supply. However, the futures lost the support in the past few sessions on news US soybean planting managed to speed up, market sources said. The US Department of Agriculture said June 13 that 88% of the expected soybeans area was already seeded by June 12, compared to the market expectation of 90% and 93% in the same period in 2021. According to the USDA, 70% of fields were in good or excellent condition. Meanwhile, the soybean prices on CBOT were also hit by potential US interest rate rises to tame inflation. FOB Santos soybean basis was on decline as a stronger dollar against the Brazilian Real attracted higher selling volume from Brazilian farmers. FOB Santos soybean basis fell 48 cents/bushel week on week. Meanwhile, the China gross crush margin remained negative, assessed at minus $21.69/mt by Platts June 15. The gross replacement margin in China remained positive at 21 yuan/mt (3 cents/mt). Taking into account variable costs, the net replacement margin for spot trading would still be negative. "Persistent negative margins would continue to keep demand coverage in China slow," a Chinese broker said. According to market sources, the demand coverage was at 77% for July shipment, with open demand at 7 million mt. For August shipment, the demand coverage was at 55% with open demand at 6.5 million mt.

Argentina government has raised the biodiesel blending mandate for small and medium-sized companies to 7.5% for 60 days, the energy ministry announced in a statement on June 15. All supplier companies will be allowed to use an additional 5% of biodiesel for blending mixture with diesel bringing overall proportion of biodiesel to 12.5%, the ministry said. This is a hike of at least 50% from current biodiesel blending mandate of 5%. As per market sources, the move came on backdrop of surging diesel demand which surpassed last year and lead to fuel rationing in some areas. The blending mandate increase will lead to tighter global supplies of soybean oil from the leading exporter as the oil derivative of raw bean are major feedstock for biofuel production in country. Diesel shortages have already disrupted operations of county's economically vital soybean and its product export complex operations such as for harvesting and crushing for oil and meal derivatives. "The global energy situation today presents scenarios of scarcity together with high diesel prices, the domestic demand for diesel has faced increases of more than 14% during the first four months of the year, compared to the same period of the previous year," said the ministry statement. The 12.5% blend of biodiesel will comprise an increase from 5% to 7.5% for the allocation for smaller and medium domestic companies from which oil companies are obliged to buy from first for diesel blending. The additional 5% blending allocation is expected to be undertaken by larger international companies serving export markets. However, it was unclear whether the entire 12.5% blend would be mandatory or whether some portion of it would be optional for fuel suppliers. Also, the ministry did not specify when the new mandate would take effect. Argentina has the availability of raw material and biodiesel production capacity to replace more than 1 million tons of diesel imports with a 100% nationally manufactured product, according to a report by the chamber of the Argentine oil industry released on June 7. In June 2021, Argentina reduced the share of biodiesel blending into diesel from 10% to 5%.

Palm oil's discount to soybean oil reached a six-week high of $282.21/mt June 14 as benchmark palm prices softened after Indonesia lifted an export ban and stepped up palm shipments. Palm oil was last valued at a discount of $191.35/mt to CBOT soybean oil on May 11, S&P Global Commodity Insights data showed. The benchmark Malaysian crude palm oil price has tumbled 21% from its peak in March, when it traded at Malaysian ringgit 1,679.40/mt. A persistently wide discount between palm oil and soybean oil increases palm's competitiveness against rival bean oil. Indonesia approved export permits for an additional 1.16 million mt of palm oil products June 13. In a series of adjustments in export levies and changes to tax rules, Indonesia lowered its maximum export levy to $200/mt from $375/mt effective June 13 until end July under its palm export acceleration program. The levy will be raised to $240/mt from August when the crude palm oil price hits at least $1,500/mt. For many months prior to June, palm oil had maintained a relatively high premium over bean oil, hitting a record premium over $400/mt in February following Russia's invasion of Ukraine, which disrupted supplies of sunflower oil, sending buyers scrambling for edible oil substitutes including palm oil.

Sugar production in Brazil's Center-South region fell 12.74% on the year in the second half of May to 2.31 million mt, data from Brazilian sugarcane industry group UNICA showed June 10. The figure was above consensus expectations of 2.17 million mt from 10 analysts surveyed by S&P Global Commodity Insights. Mills in CS Brazil crushed 43.69 million mt of sugarcane in H2 May, up 0.04% year on year, UNICA said. Sugar's share of the crush for H2 May was 43.16%, compared with 46.22% a year earlier. A total of 248 mills were operating as of June 1, one less than in the same period of 2021. Market participants expected another three mills to begin operation in H1 June. Total recoverable sugar, or ATR, in H2 May was 128.64 kg/mt, a decrease of 6.58% year on year. Ethanol production, sales Ethanol production in CS Brazil was 2.031 billion liters in H2 May, up 0.51% from 2.021 billion liters a year earlier, UNICA said. Hydrous ethanol production accounted for 1.253 billion liters, up 2.77% on the year, while anhydrous ethanol output was 778 million liters, down 2.92% on the year. Corn ethanol production in H2 May was 156.79 million liters, an increase of 26.44% year on year. Ethanol sales by mills in CS Brazil during May were 2.34 billion liters, 7.13% lower year on year, with 2.24 billion liters going to the domestic market and 101.1 million liters for export. The quantity of hydrous ethanol sold to the domestic market during May was 1.40 billion liters, down 9.17% on the year. The quantity of anhydrous ethanol sold to the domestic market was 847.67 million liters, up 0.85% on the year.

China, the world's largest importer of soybeans, has been actively purchasing soybeans for nearby shipment, with product from the US Gulf starting to compete with beans from Brazil. For July shipment, ample supply of Brazilian soybeans has them the more competitive option, but for July-August and August shipments, old crop US Gulf soybeans are coming in cheaper than Brazilian product. On June 9, one US Gulf cargo of July-August shipment was reported traded at 318 cents/bu over July(N). With the quality spread at 13 cents/bu between US Gulf and Brazilian soybeans and 5 cents in carry between July and August shipments, the traded value was equivalent to a Brazil August cargo at 333 cents/bu over July(N), 2 cents/bu cheaper than the sharpest offer for Brazil August shipment at 335 cents/bu. "This week, US Gulf soybeans were offered on par or 1-2 cents/bu lower than Brazil soybeans for August shipments," a Chinese crusher said. Nonetheless, there was limited downside to US Gulf soybeans. "With the potential downward revision of soybean inventories in the US for 2021/22 due to higher-than-expected exports, there will be a tighter supply of US Gulf soybeans of August shipment, so Brazilian soybean prices might need to go lower in order to compete for better demand," a Chinese trader said. Chicago Board of Trade futures rallied overnight, gaining about 30 cents/bu. Market participants are now switching their focus to the release of the USDA's WASDE reports later June 10.

Dreams are unrealistic, impractical, demanding – but absolutely essential to living a rich and fulfilling life, Ralph Marston once said. But what if a dream is too good to be true, especially when you are betting against mother nature? China has pitted its food security mission against the ever-rising menace of climate change. With global warming-led extreme weather conditions across the world, agriculture has never been on shakier ground. The imminent threat of droughts, floods, hurricanes and tornadoes gets stronger with each passing year, making production and yield forecasts murkier than ever. When the world’s second largest economy embarks on a mission of self-sufficiency in food supplies to feed its 1.41 billion population, skepticism is likely to prevail – especially when the country has been witnessing a spate of climate change-led natural disasters in recent years. China’s agricultural ministry conceded in March that the country is staring at the worst-ever crop harvest in 2022 on the back of record floods and other natural catastrophes last year. Global warming, which some say is China’s undoing, is quickly changing the narrative of what’s normal weather and what’s abnormal. Northern China, a key region for grains production, which used to be typically dry and arid, was flooded during the corn harvest in 2021, leaving nothing but mud and misery for the distraught farmers. Henan, China’s key agricultural province that grows about 25% of the country’s wheat and 10% of its corn, and accounts for 10% of the nation's pork production, received years’ worth of precipitation in just three days in July 2021, leading to disastrous flooding and widespread crop and livestock damages. If that’s not all, climatologists see China as the hotspot of global warming-led natural calamities in years to come. A China Meteorological Administration-backed research report has raised fears that the country is in fact the most vulnerable to climate change. China's average temperature has risen faster that the global average, making the country extremely susceptible to floods, droughts and typhoons, the CMA report released August 2021 said. Compounding the severity of the situation, scientists fear that due to global warming, China could be on the brink of being hit by a wave of crop pests and diseases in coming years, jeopardizing the country’s food security ambition even more. Why China needs food security There is an old Chinese saying that as long as public grain reserves are full, governance will be easy. China's President Xi Jinping said on March 6 that food security is a major issue, without which the country could be left vulnerable to foreign factors, such as geopolitical risks. China must show urgency in bolstering its agricultural production, Xi said. it needs to stabilize food and corn production and expand output of soybean and oilseeds to make sure Chinese bowls are mainly filled with Chinese food, he said. An increasingly assertive Beijing sees food security as an enormous challenge. The country may have colossal economic clout, but it’s not doing too well on food security parameters. China ranked 34th out of 113 countries in the 2021 Global Food Security Index, which measures food affordability, availability, quality and safety, and natural resources and resilience. “The last thing Beijing needs in its bid to become a global superpower is to depend on foreign food supplies,” a Shanghai-based commodity consultant said. Soaring food prices amid extreme weather conditions across the globe, coupled with Russia’s invasion of Ukraine, have left the world’s second largest economy frantic in its effort to secure supplies. China is the world’s biggest importer of corn and soybeans. In the last couple of years, the country has also emerged as one of the top importers of wheat. This trend doesn’t bode well for a country aiming for food self-sufficiency, especially when its agriculture sector is decades behind the west in terms of modernization. “Every country in the world has faced natural climate change-led natural disasters, but China’s limiting factor is its fractured farming system and antiquated methods,” said Pete Meyer, head of grain and oilseed analytics, S&P Global Commodity Insights. Food security measures Some China-based agronomists and consultancies concede that food security is a herculean task for the Xi government. Nonetheless, they feel some important measures must be taken as a first step in facing this humongous challenge. “With such a large population and limited farmlands, we cherish every piece of land and make every effort to fight the floods and droughts and reduce the losses,” Shanghai-based agro consultancy JCI China said. Beijing is investing a lot of money in reviving domestic farm production, JCI said. Crop rotations, bolstering the agricultural infrastructure, deferring sowing time to avoid unfavorable weather and developing water-storage technologies are some of the steps government has taken, it said. Doable or not For some, the scale at which China needs to revitalize and modernize its farming sector to counter climate change is too great and perhaps too late. Global warming is adversely affecting crop yields across the world, especially China, researchers said. So, unless there is a universal collective resolve to rein in climate change, Beijing is fighting a losing battle, they said. But history has also shown time and again that a resolute China can turn conventional wisdom on its head. Many doubted the world’s second largest economy when it embarked on a mission to become a major global economic powerhouse by the turn of 21st century. We all know what happened next. Having said that, the Asian giant’s food security aspiration seems more ambitious than snowfall in the Sahara. With global warming-led climate change onslaught on China, skeptics are again having a field day. But S&P Global’s Meyer is having none of it. “China is well aware of the predicament around providing enough food for its population and will stop at nothing to get there,” he said. Only time will tell if grappling with mother nature is as feasible as winning Olympic medals.

Brazil's spot corn prices are likely to ease as harvest gathers pace in the coming weeks, according to local government reports. Buyers in Brazil have been waiting for the arrival of the second corn crop so as to be able to trade a higher volume because a potentially record harvest might pull prices down, S&P Global Commodity Insights said in its assessment report on May 31. In Mato Grosso, corn prices fell to Real 67/60kg bag ($234.50/mt) on May 31 from Real 70.4/60kg a week ago, according to data released by the Mato Grosso Institute of Agricultural Economics, or IMEA. The corn harvest in the second major crop-growing state of Brazil, which accounts for 92% of the cultivated area, was at 0.6% as of May 28, Brazil's national agricultural agency Conab said. Weather conditions have been favorable in Mato Grosso, the largest grain producer in Brazil, and the state is expected to produce a bumper harvest. Corn harvest in Mato Grosso is still in the early stages and the dry weather condition is likely to favor field operations. Corn yield from the initial batches has been excellent in Mato Grosso, reaching above 6.3 mt/ha, Conab said May 31. Conab forecasts Brazil's total corn production in the marketing year 2021-22 (February-January) at a record 114.6 million mt. Brazil's 2021-22 corn crop will be marketed from February 2022 to January 2023. The first-corn crop in Brazil is planted from September-December and harvested over February-May, while the second crop is planted from February to March and harvested in June-July. While corn prices are expected to fall in the near term as the harvest nears, a sharp drop in prices is unlikely. "It is worth noting, that grain availability is lower in the world and the relaxation of phytosanitary agreements with Brazil by China should increase the demand for Brazilian corn and will support price in the second half of the year," Conab said. Brazil and China completed some key negotiations on starting Brazilian corn exports to China, Brazil's Ministry of Agriculture, Livestock and Supply announced on May 23. However, there is no clarity as to when China would allow imports of Brazilian corn into the country.

Third month palm oil futures on the Malaysian derivatives exchange rose as much as 4% during afternoon trade May 20 after Indonesia announced that a resumption of exports from the country will be accompanied by domestic market obligations for its palm oil producers. The August crude palm oil contract on the Bursa Malaysia Derivatives exchange was up 3.8% at MR 6,304/mt ($1435.4) at 3:34 pm local time May 20. While Indonesia is the world's largest palm oil producer and exporter, international prices of the commodity are underpinned by prices on BMD, the commodities exchange of the second-largest supplier Malaysia. Indonesia and Malaysia account for 85% of the world's supply of palm oil. Indonesia will maintain a domestic market obligation of 10 million mt of cooking oil, under which producers will have to reserve 8 million mt of cooking oil and 2 million mt of raw materials, the country's coordinating minister for economic affairs Airlangga Hartarto said in a video broadcast May 20. Indonesia will also determine the size of the domestic obligation for each palm oil producer in the coming days and the country's logistics agency is tasked with building buffer stocks at 10% of total demand, Hartarto said. "Given the 10 million mt requirement, looks like Malaysian palm oil is still in demand and that is causing bullishness in the crude palm oil [CPO] market today," David Ng, senior trader at Kuala Lumpur-based IcebergX Sdn Bhd told S&P Global Commodity Insights. Indonesia's President Joko Widodo announced on May 19 that Jakarta is revoking a ban imposed in April on exports of crude and refined palm oil products starting May 23. While the resumption in Indonesia's outflows would ease tight supplies in the global vegetable oil market, the conditions set by Jakarta May 20 indicate that the factors influencing Malaysian output are still influencing markets, trade sources told S&P Global. Now that the "fear factor" of when the ban will be removed is out of the picture, Malaysian factors such as rising exports in May and tapering production due to worker shortages at plantations would be key drivers, said Lingam Supramaniam, director with vegetable oil brokerage Pelindung Bestari at Port Klang Malaysia. Malaysia's exports rose between 20% and 30% in the first 20 days of May, according to data from various cargo surveyors such as Intertek and Amspec. "We see limited downward pressure on palm oil prices as Indonesia's policy is still not clear on DMO, export taxes, and levies," Abdul Hameed, head of Pakistan-based Manzoor Trading Co. told S&P Global. "Vegetable oil markets will be bearishly impacted in the coming days, but this may take some time as Malaysia is selling physical contracts of CPO at high prices and this will support prices in the near term." Indonesia's export outlook for marketing year 2021-22 (October-September) was lowered on May 12 to 25 million mt by US Foreign Agricultural Service -- a 12 year low -- citing Jakarta's slow export pace through the first six months of 2021-22 and various palm oil export policies in effect since November, 2021.

Malaysia's palm oil inventories are expected to rise to 1.61 million mt at end-April, up 9.3% from a month before due to lower exports and better production, a S&P Global Commodity Insights survey showed May 9. April exports by the world's second largest palm oil producer and exporters are likely to be around 1.15 million mt, down 8.7% from 1.26 million mt in March, according to the median estimate of ten analysts and traders polled by S&P Global. Cargo surveyors Amspec and Intertek had earlier forecast a bigger dip in exports, with April outflows projected to fall by 14% to 16% on the month as high prices dampened demand from key buyers in Asia and the EU. Demand from China, the world's second largest vegetable oil buyer, was negligible in the month due to the high price of palm oil vs soybean oil coupled with lockdowns in major cities which had capped appetite for imports. The Malaysian Palm Oil Board or MPOB will release its monthly data on May 10. Trade sources expect Malaysia's exports to surge in May, as bigger rival Indonesia announced a complete ban on palm oil exports starting from April 28 to curb accelerating food inflation and cooking oil shortages within the country. Indonesia's palm oil export ban is likely to be lifted by the end of this month, Manoj Shukla, senior analyst at Agriworld said. This may lead to a slump in Malaysia's ending stocks for May, but for April it may end up being the highest in six months, Shukla added. Jakarta has said that it will remove the ban when the domestic price of cooking oil goes below Rp 14,000/liter (96 cents/liter). Currently price is around Rp 17,000/liter. "Malaysian supply and demand data is looking bearish, but now the key factor is Indonesia's export policy." Abdul Hameed, director of sales at Pakistan-based Manzoor Trading Co said, adding that there is market chatter that Jakarta may introduce a quota system for exports in the coming days. Indonesia and Malaysia account for 85% of the world's palm oil supply. The S&P Global survey pegged Malaysia's April palm oil production at 1.48 million mt, up from 1.41 million mt in March. "Production is seen lower due to rain in the second half of the April as well as labor movement due to the Ramadan holidays," Aditya Jeripotula, head of research at Hyderabad-based commodities firm, TransGraph Ltd said. The price of local deliveries of Malaysian crude palm oil rose from MR 6,251/mt ($1,426.5) on April 1 to MR 7,605.5/mt on April 29, according to MPOB data. Malaysia' palm oil supply and demand April survey median April survey range March official data Production 1.48 1.34-1.58 1.41 Exports 1.15 0.99-1.25 1.27 Ending stocks 1.61 1.4-1.79 1.47 * all figures in million mt

Russia's agriculture ministry on May 6 set the variable export tax on wheat at $114.30/mt for the May 13-17 period, down $5.80 from the May 6-12 previous period, the first reduction in the export tax since March 16. The export tax had been rising following higher export prices after the start of Russia's invasion of Ukraine. The variable export tax was introduced in Russia on June 2, 2021, to limit the increase in grains prices. The export tax is calculated as 70% of the difference between the average of export prices on an FOB basis during the 60 days preceding the day of calculation and $200. It is published every Friday and enters into force on Wednesday of the following week. S&P Global Platts assessed FOB Black Sea wheat (Russian Deep Sea, 12.5% protein) at $392/mt on May 5, down $2 week on week.

S&P Global Commodity Insights will begin publishing a daily price for the relative value comparisons of Americas animal feed ingredients that Platts assesses, effective May 2, 2022. The calculated values give feed buyers more tools to compare different animal feed ingredients. S&P Global proposed these new calculations in a subscriber note published March 14. The Americas relative values are calculated using Platts assessment prices and CME futures settlement prices, compared on a percentage based on their US dollar to short ton value. Platts North America price assessments are timestamped to 1330 Central Time while Latin America agriculture prices are timestamped to 1730 São Paulo time. S&P Global will begin publishing: The US Distillers Dried Grains with Solubles CIF New Orleans (AADDG00) relative value to corn will be calculated as a percentage of the US #2 yellow corn CIF New Orleans (WCNOA00) price and published under the symbol: ADDGB00. The US Distillers Dried Grains with Solubles CIF New Orleans (AADDG00) relative value to soybean meal will be calculated as a percentage of the Soybean Meal Argentina FOB Up River (SYMAA00) and published under symbol: ADDGC00. The US Dried Distiller Grains FOB Chicago truck (ACDDG00) relative value to soybean meal will be calculated as a percentage of the CBOT Soybean Meal Settle Mo01 (CBAAB00) and published under symbol: ADDGD00. Platts will also publish the Platts US DDGS CIF New Orleans, Soybean meal FOB up-river Argentina and US #2 yellow corn CIF New Orleans as a value per unit of protein (PUP) under the respective symbols: ADDGA00, ASOYA00, and ACORA00. As per Platts methodology, US DDGS calculation uses a 25% minimum protein content, and Argentinian soybean meal uses the assessed 47% protein content. The animal feed ingredient calculations will be published in the Daily Grains report, and on Platts Dimension Pro under their corresponding symbols as well as on the Platts Agriculture Alert and Platts Biofuel Alert pages 501, 502, and 503. Please send any feedback, questions, or comments to americas_ags@spglobal.com and pricegroup@spglobal.com . For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

S&P Global Commodity Insights will launch two half-month averages for Platts SOYBEX FOB Santos Brazil soybeans, effective June 1, 2022. S&P Global published a proposal for this April 8 in a subscriber note The calculated values will bring greater transparency to the average of the half month daily FOB Santos US dollar per metric ton price assessment (SYBBB00). The first half-month average will be calculated using the daily price from the first to 15th day of the calendar month, the second half-month average will be calculated from the 16th to the end of the calendar month. The two average calculations will be published in $/mt on Platts Agriculture Alert and under the oilseeds market data category. Please send any feedback, questions or comments on the proposed half-month averages to americas_ags@spglobal.com and pricegroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by S&P Global for public viewing. S&P Global will consider all comments received and will make comments not marked as confidential available upon requested.

Europe's wheat farmers are having to consider when best to sell their upcoming crop, two months after Russia's invasion of Ukraine triggered a surge in prices that has resulted in a steep backwardation in the market. That surge applied to prompt delivery as importers rushed to secure alternative supplies. But with most farmers' wheat was in the ground, not in silos, they have been watching forward prices for delivery in the months after the 2022 harvest. While France and Romania are the EU's two largest exporters, farmers in the two countries have shown a very different appetite for risk, sources said. "French farmers have been selling quite a lot ... while in Romania farmers are not moving," said one trader, who estimated that around 30% of France's wheat crop has already been sold for the 2022-23 marketing year (July-June). Rising input costs, especially for fertilizer and fuel, would typically encourage wheat farmers to lock in future sales, often under pressure from banks who have financed the purchases. But many now believe in the potential for further price increases. "We are not seeing much activity at all on the new crop ... it is very unusual," said another participant in the Black Sea wheat market. "They [Romanian farmers] want to wait as long as possible not to sell too low, as long as Russia and Ukraine remain absent or slow, and they do better still." Ukraine represented 8% of total global exports in My 2020-21. The suspension of its seaborne exports at the end of February was felt most acutely by those seeking wheat for shipment in March and April, leading to a steep premium for prompt cargoes. In France, a farmer who agreed April 27 to sell 11% protein wheat for delivery in May would receive Eur418.50/mt ($449/mt) while they would get Eur41/mt less if they sold for delivery in September (based on the price of MATIF wheat futures at 1630 GMT). The backwardation between May and September is typical given that the new wheat crop is usually available across Europe from late June, but the size of this year's discount is exceptional. At the same point in 2021, when the May contract was at Eur248/mt, the discount for September was Eur20.25/mt. It was just Eur8.75/mt in 2020 and Eur10/mt in 2019. The closure of Ukraine's main ports has forced grain exporters to employ trucks, trains and barges, which limits exports to around 500,000 mt per month, rather than around 5 million mt before the war, traders said. Russia's ports, meanwhile, were expected to ship at least 2 million mt of grain in April, not far from pre-war expectations for this comparatively quiet point in the year. But Russia's wheat exports may show larger year-on-year falls after the harvest, given that the war has made it harder for Russians to insure cargoes and find vessels.

Sugar production in Brazil's Center-South for the first two weeks of the 2022-23 season showed a drop of 79.99% year on year at 126,627 mt, data from trade association UNICA showed April 28. The figure was lower than the consensus expectations of 278,900 mt from 10 analysts surveyed by S&P Global Commodity Insights. Mills in CS Brazil crushed 5.19 million mt of sugarcane in first-half April, down 66.87% year on year, UNICA said. "The reduction in the cane crush for H1 April was because lesser mills were in operation compared to the prior season due to an average 15-20 day delayed start to the harvest because of suboptimal weather induced poor cane maturation," a Sao Paulo-based trader said. Sugar's share of the crush for H1 April was 25.95% compared with 38.80% a year earlier. A total 85 mills were operating as of April 16, 64 less than in the same period of 2021. Market participants expect another 104 mills to begin operation in second-half April. Total recoverable sugar, or ATR, in H1 April was 98.66 kg/mt, a decrease of 9.72% year on year. Ethanol production, sales Ethanol production in CS Brazil was 397.53 million liters in H1 April, down from 735.66 million liters a year earlier, UNICA said. Hydrous ethanol production accounted for 381.55 million liters of the total, while anhydrous ethanol output was 15.98 million liters, it said. Corn ethanol production in H1 April was 170.32 million liters, an increase of 48.52% year on year. Ethanol sales by mills in CS Brazil during H1 April were 1.054 billion liters, 6.67% higher year on year, with 1.027 billion liters going to the domestic market and 27.36 million liters for export. The quantity of hydrous ethanol sold to the domestic market was 678.28 million liters, 2.83% higher on the year. The quantity of anhydrous ethanol sold to the domestic market was 348.32 million liters, 11.99% higher on the year.