Miller Magazine Issue: 156 December 2022

MARKET ANALYSIS 93 MILLER / DECEMBER 2022 sponsor of terrorism does not meet the expectations of Rus- sian politicians. This led to record stocks of grain in Russia. Wheat stocks in agricultural organizations (excluding small forms) as of November 1, according to Rosstat, still remained at a record level of 29 MMT- almost 1.5 times higher YoY. The previous record of 22 MMT was set five years ago, in No- vember 2017. Russian 22/23 wheat exports forecasts: IKAR 44mmt, Sovecon 43.7mmt, Rusagrotrans 43.5mmt, ProZer- no 43.5mmt, Russian Grain Union 42-43mmt, WASDE USDA 42mmtm, IGC 41.1mmt, Russian MinAgri 41.1mmt. Russia continues to look for tools to bribe buyers and manipulate the market in order to sell as much grain as pos- sible and make the maximum number of countries depen- dent on Russian commodities. Fixing the rate of the duty in the event of the sale of grain for export through exchange trading will return to the practice of long-term planning of operations and make exports more transparent and pre- dictable, said in the Union of Grain Exporters. Earlier, the First Deputy Prime Minister of Russia instructed the Ministry of Finance, the Ministry of Agriculture, the Ministry of Economic Development and the Ministry of Foreign Affairs of Russia to work out the issue of providing inter- state targeted loans in ru- bles to friendly countries by the end of 2022 for the pur- chase of Russian agricultural products. In addition, foreign companies and government agencies that purchase food directly will be able to open bank accounts in Russian banks under a simplified scheme, receive access to exchange trading and clearing for transactions, conversion operations and settlements. According to Russian officials, all friendly countries could potentially show interest in exchange trading in Russian grain with state support, since consumer credit for the pur- chase of goods is a standard trading practice. It looks like a childish trick - “who will be friends of mine - he will get a big and sweet candy.” But what side effects it has – we can only guess. At the same time, a reduction in export duties on grain or an increase in the “cut-off price”, which was previous- ly discussed in the State Duma of Russia, “neither in the framework of the project of exchange export trading nor separately discussed.” In addition, there were even mentions in the press of a possible transition to trading for cash dollars - literally in suitcases - as in the movies of Guy Ritchie. The country is short of cash dollars as a result of the sanctions. Iran, according to UN FAO estimates, will increase grain production in 2022 by 16% compared to last year, to 19.5MMT. Wheat production will increase from 10.4 MMT in 2021 to 13 MMT in 2022, while the average annual in- dicator in 2018-2020 will be 14.3 MMT. Wheat imports are projected to decline from 7.9 MMT in 2021/22 to 5 MMT in 2022/23, with an annual average of 5 MMT from 2018/19 to 2020/21. Iran slows wheat imports from Russia, which provides about 2/3 of external supplies, which is clearly vis- ible this season. In July-October 2022, Russia exported to Iran almost 2 times less than a year ago at around 1.8 MMT of wheat, despite Iran’s publicly declared ambitions to be- come the largest buyer of Russian grain. Many banks in Ban- gladesh have reined in opening most of the letters of credit, including for im- porting daily necessities, due to the ongoing crisis of foreign currencies in the country. Even with the dollars coming from remit- tances and export earn- ings, the bank authorities are unable to pay their im- port payment obligations and foreign debts of their customers. Not only that, bank officials are even hesitant to open LCs worth $200,000 to $300,000. There are problems with payment over Iranian contracts as well. High commodity prices have led to an in- crease in India’s wheat and canola acres, which are up 15% year-over-year, per the latest data from the country’s farm ministry. Indian farmers have planted wheat on 4.5 million hectares since October 1, up 9.7% YoY, according to data from the Indian farm ministry. Per the latest data from the Ag Ministry wheat was planted on 10.1Mha as of 18 November, up from last year’s 8.8Mha. Hot weather in March severely affected the 2022 crop and curtailed plans for Indian wheat exports while driving local prices up 27% since May. Inven- tories are at a multiyear low, creating an additional incen- tive to replenish domestic stocks. Late rains in October and November increased soil moisture boosted planting, said growers. Looks like it became less room for wheat on the market. But this is not a movie. It’s a show. See you at the next Ep- isode.