Fundamentally Speaking

Though outside markets and U.S. weather are becoming main talking points, the fact is that that Russia's invasion of Ukraine really remains the most bullish factor for the market.

With the war now close to four months old, the early optimism that stout Ukrainian resistance would force Moscow to the bargaining table has shifted as Russia is gradually beginning to gain control in large parts of eastern Ukraine.

With the war starting to turn in their favor, they see no reason for anything other than half-hearted attempts at diplomacy plus they have benefited from the surge in almost all commodity prices.

This has had a major impact on Ukrainian overseas sales of grains and vegetable oils as depicted in this chart where Ukrainian exports of corn, sunoil and wheat in 1000 tonnes are plotted on the left-hand axis and those volumes as a percent of the world trade total are reported on the right-hand axis.

The impact on the world trade situation is quite dramatic since Russia's invasion of that country started February 24 and the 2021/22 figures given last Friday are far different that those furnished by the USDA in its February 2022 WASDE report with even lower figures for the coming season.

Since 2000, Ukraine's corn exports have increased from a mere 0.40 mln tonnes to 33.5 mln for the 2021/22 season in the USDA's Feb 2022 WASDE report but the June number is now down to 23.0 mln for this year and an even lower 9.00 mln for next year as their share of the world corn trade which earlier this year was seen as high as 17.2% now down to a projected 4.9% for the 2022/23 season.

Same for sunflower seed oil as in 2000 Ukraine's exports were just 550,000 metric tons (mt) which increased to 6.65 million metric tons (mmt) for the 2021/22 season in the USDA's Feb 2022 WASDE report, but the June number is now down to 4.10 mmt for this year and an even lower 3.60 mmt for next year as their share of the world sunseed oil trade which earlier this year was seen as high as 54.7% for the 2021/22 season now down 40.1% and an even lower 34.7% for the 2022/23 season.

As for wheat, back in 2000 Ukraine exported just 5.5 mln tonnes but in February the USDA said they would export 24.0 mln tonnes for this year or 11.5% of the world total but last week that was down to 19 mln tonnes and a 9.5% share falling to just 10 mln tonnes for the coming season at just 4.9% of the world total.

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