Baltic routes, importer shifts and El Niño test grain markets

The Black Sea remains sluggish, with vessels anchored offshore awaiting passage through the Danube to load cargo. Ukrainian shipments from Izmail and Reni are crucial for the export campaign, although volumes are modest. Russian shipments through the Black Sea are limited, but Baltic ports such as Vysotsk, Ust-Luga, and St Petersburg are seeing increased activity.

Russian wheat exports have been building in these Baltic ports, with the potential to surpass September's record levels. However, the average voyage duration for Russian wheat has increased due to longer routes. Overland exports are also contributing to the grain market, with non-seaborne channels handling closer to 1 million tonnes per month, up from the usual 300,000 to 400,000 tonnes.

Importers are split between paying higher prices and waiting for more favorable terms. Turkey is importing less Russian wheat, relying more on Romanian supply. Egypt, the world's largest wheat importer, is import-dependent and waiting for lower prices. Indonesia is purchasing a larger volume of Argentine wheat earlier than usual, benefiting from Argentina's strong harvest.

The EU and Argentina are taking up displaced demand, with Baltic EU grain moving to Sub-Saharan Africa and French wheat gaining more North African business. The US is nearing import parity, with the latest World Agricultural Supply and Demand Estimates cutting 25 million bushels from the US export campaign. Southern Hemisphere supply, particularly from Australia and Argentina, adds competition to the grain markets.

Despite El Niño, Australia's wheat production is nearing 30 million tonnes. In Russia, ex-farm prices for wheat are historically low, but alternatives are limited. Freight firms are seeing higher earnings due to increased bunker costs, but vessel supply and logistics constraints may keep owners from rushing to return to normal trading conditions.