Miller Magazine Issue: 150 June 2022

MARKET ANALYSIS 96 MILLER / JUNE 2022 short of the 15.0 bln mandate, potentially by as much as 800 mln gal. The EPA expects that the shortfall will be made up with greater volumes of bio and renewable diesel. They also reasoned that maintaining the mandate at 15.0 continues to provide an incentive for the industry to expand the infrastructure for higher blends. IHS Markit updated world production estimates and it’s interesting to note their Ukraine crop size at 24.5 MMT vs the USDA at 19.5 and below the current year’s crop of 42 MMT. The planted area has already reached 4.6 mHA and a 25 MMT crop assumes yields near 5.5 tn/HA at the low of 5Y average because of the War. Ukrainian export corridor talk was a feature all week and there is a high-level meeting on this issue on Jun 8 in Ankara with Russian De- fense Minister Lavrov. Putin also turned up the rhetoric on grain exports with statements that Russia was ready to guarantee exports from the Azov Sea and that they will increase grain exports to 50 MMT. Putin also indicated that Ukraine could export grain from the ports it controls. Russian SovEcon served up a 42.3 MMT Russia wheat export fore- cast vs 41 previously and USDA 33 this year. Rumors appeared on the market that farmers in the regions were ordered to increase their yields in order to legalize grain exported from Ukraine under the guise of a record Russian harvest. USDA’s May forecast for Russia’s 22-23 exports at 39 MMT seemed wildly optimistic and 42.3 is off the charts consider- ing the sanctions, war risk and potential lack of insurance and fleet. Iran expressed its readiness to re-export Russian grain to other countries. In addition, Russia and Iran intend to introduce trade based on barter. Russia will supply raw materials to Iran, and Iran is ready to supply gas turbines and auto parts to Russia. Meanwhile, Pakistan denies the decision to trade in barter. The mar- ket is too sensitive to these promises, while Russian troops damaged another port infrastructure facility the current days and Turkish officials mentioned that even in case of positive decision opening ports could take up to 5 weeks. The Russian government, supported by around 86% of Russians which is 100 million of people, purposely blocked ex- ports of feed grains, vegoils and protein meals from Ukraine and during the last few seasons sets duties, quotas to check how string your pa- tience is. While Russian troops are destroying Ukrainian fields, railways, silos, terminals and ports, your pockets became empty. Still, there are lots of problems and security questions about this pro- cess. Rumors give hope to inexperienced market participants. In fact, Russia is demonstrating the opposite: it has already been announced that the effect of restrictive measures on the export of grain, sunflower, fertilizers will be extended, which will further aggravate the food crisis. In the Russian-occupied Ukrainian port of Mariupol, the loading of a batch of metal onto a ship of the Slavutich type has been completed. it will deliver the cargo to the Russian port of Rostov. The port administra- tion reported that the second vessel will depart from Mariupol on June 2-3. Similarly, the Russian occupiers announced their intention to export grain and other goods from the rest of the captured Ukrainian ports. The Russian dry cargo ship Matros Pozynych, carrying Ukrainian grain from the southern regions, made its 2nd voyage to Syria, writes CNN. More grain was stolen from Ukraine. Russia continues to blackmail the world with food, demanding the lifting of sanctions. At the same time, there are no sanctions on the grain trade, and the Kremlin itself has stated that sanctions will benefit Russia. The lack of a sufficient number of merchant ships is a consequence of the war that Russia unleashed, and not the fault of the “collective West”. Therefore, the Russians an- nounced their intention to build their own fleet. In the absence of tech- nologies, equipment, basic spare parts and mechanisms and total cor- ruption in the country. Indian banks have begun to open letters of credit to buy Russian agricultural products and provide other loopholes to buy Russian ag- ricultural products. The governments of Russia and India are working to harmonize the payment system in rupees and rubles in order to cir- cumvent banking sanctions. In light of the growing panic in the wheat