Fundamentally Speaking

Interesting to note that this week Cargill Inc., the world's top agricultural commodities trader, said based on a recent rise in the company's grain exports out of Ukraine they are increasingly optimistic that the Ukraine grain export corridor deal which runs until March 18 will be renewed.

They also noted there is political support from around the world to keep the corridor open especially from China, which listed that goal as number 9 in its 12-point plan to resolve the war in Ukraine.

This one of the reasons why corn has traded down to its lowest levels since last August, with wheat now fetching its lowest price since the summer of 2021 and perhaps indirectly why spot soybean oil has tumbled to its lowest point since last July.

The amount of wheat and corn produced and exported by Ukraine was a major influence on the price discovery process for those two markets but perhaps even more so for sunflower seed oil.

This chart shows sunseed oil output out of Russia and Ukraine as a percent of world production on the right-hand axis and their exports as a percent of the global total on the left-hand axis while also reported in the right-hand axis is world sunflower seed oil production as a percent of the world vegoil total.

Even with the war, these two countries remain dominant in both sunseed oil output and exports with their combined production over half the world total at 51% and their combined export share more than two-thirds of the global total at 68%.

Both of these are down however from the peak figures seen back in the 2019/20 season at 62% and 78% respectively and that is based on the much heavier toll the war has taken on the Ukrainian sunseed oil industry as opposed to Russia's.

The latest USDA statistics peg Ukrainian sunoil output this year at 4.30 million metric tons which is off 42% from the high of 7.39 million tonnes three years ago, yet Russian production this year at 6.195 million tonnes is a new record high.

As for exports in the February WASDE, based on a higher crush for each country, the total was boosted by 150,00 tons for Russia and 200,000 tons for Ukraine with each projected to ship 3.850 million tons.

For Russia this is a new all-time high but not the case for Ukraine as their 2022/23 exports also down 42% from the high of 6.87 million tonnes three years ago.

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