The S&P Global Platts FOB Black Sea Wheat (BSW, reflecting Russian Deep Sea 12.5% protein wheat) assessment averaged $212.413/mt over April 1-30, marking a 2.2% increase from March's monthly average of $207.905/mt, with limited availability towards the end of the season providing support to prices.
This was a significant increase of 22% over prices seen during the same period in 2017, according to Platts data. Black Sea Wheat averaged $174.162/mt over April 2017.
Prices gained during the first half of the month this year, moving from lows of $208.50/mt on April 3 to highs of $215/mt by April 19, largely buoyed by short positions into Egypt's most recent GASC tender, and limited availability of 12.5% protein wheat in the south of Russia.
Ongoing political tensions between Russia, Europe and the US also took the ruble to lows of 64.43 against the US dollar during April, levels not seen since early 2017. Although a lower ruble is traditionally favorable for Russian exporters, the low availability around ports in the south of the country meant that transshipment and replacement costs were high as farmers looked to offset volatility by offering high prices.
Black Sea Wheat prices took on a more bearish outlook after April 23, however, as open positions had largely been covered by this point. Focus also turned to the new crop, when offers for 12.5% protein wheat FOB traditionally dip on renewed availability.
A total of seven deals were reported over the month, most of which were concluded for August onward, when prices for Handysized vessels dropped to $196-197/mt.
Elsewhere, April monthly average prices of $239.825/mt in the Australian Premium White (APW) wheat market were similarly higher versus the same period in 2017, although the change on March was nominal at a 0.4% increase.
The average April spread between APW and BSW narrowed by 11.5% from March, dropping below $30/mt to $27.413/mt, leaving the arbitrage firmly closed for prompt spot trading.
In the paper market, more than 4,400 lots of Black Sea Wheat futures were seen cleared through CME. The bulk of activity was focused further out on the curve in Sep-18 and Oct-18, where prices had dropped from around $205/mt and $210/mt early in the month to $203/mt and $207/mt by April 30.
CORN CARRY STRUCTURE CRUNCHES
Platts FOB Black Sean Corn (reflecting Ukrainian Deep Sea) assessments posted falls of 1.8% over the month to average $204.475/mt in April.
Values gradually eased back from their high of $206/mt at the start of the month to lows of $201.75/mt, as a few remaining long positions began to weigh on sentiment towards the end of the month.
The market remained in a strong contango (or carry) structure, however, meaning prices further out were higher than those seen on the prompt, which caused sellers to hold stocks and stalled activity somewhat.
A total of 15 deals were observed with most focused on the prompt, although deals for new crop in November and December towards the end of the month that were slightly lower added some downward pressure, crunching the contango structure by April 30.
Another bearish factor weighing on the market was China's recent announcement that it would implement import duties on various US agricultural products including corn, soybeans and sorghum, which left US cargoes seeking alternative destinations, including some of the Ukraine's traditional markets such as Spain, limiting demand.
Meanwhile in Asia, CFR Northeast Asia corn prices averaged $220.690/mt, up 15.6% on the month as tight logistics from the US Pacific Northwest has severely limited the ability of seller to discount prices.
This tightness came on top of continuous downgrades to the Argentinian corn crop, by 3 million mt to 33 million mt for 2018/19 marketing year, due to dry weather.
Additionally, US-China trade tensions raising the possibility of import tariffs on soybeans are expected to shift a big portion of Chinese demand towards Brazil, where soybeans and corn will be competing for logistics.
The spread between Northeast Asia and Black Sea Corn moved into positive territory as NEA prices moved higher, but at an average of $16.215/mt the arbitrage between the two regions remained closed.
