Wheat prices in Ukraine remain under pressure from lack of exports

The blockade of ports continues to put pressure on wheat prices in Ukraine, which fell to 5500-6000 UAH / t ($ 188-205 VAT with delivery to the mill) amid significant supply and lack of demand. International traders have stopped buying wheat because export demand is very low, Farmers are in no hurry to obtain wheat export licenses, primarily selling corn and sunflower at reduced prices, and withholding wheat to resume exports in order to sell it at a high price.

Export demand prices for wheat remain at $ 260-270 / t with delivery to the western border and $ 310-330 / t with delivery to the port of Constanta. However, exports through Romanian ports are greatly complicated by permanent conventions for rail transport, and the cost of delivery by car, the number of which is insufficient, is 140-160 $ / t, while the reception of big bags in ports is not carried out.

While Ukrainian producers sell grain at a large discount, Russian farmers receive extra profits from wheat exports, which have recently reached 2 million tons per month. According to ICAR and Sovekon, prices for food wheat with 12.5% protein and delivery in June-July for the week fell in Russian Black Sea ports by $ 5-10 / t to $ 403-420 / t FOB, which is a record level.

During the week, Russia reduced wheat exports from 340 to 220 thousand tons due to falling domestic purchase prices to 14,600-15,000 rubles / ton ($ 259.73 / ton) in the European part of the country in anticipation of an increase in export duties on wheat from June 22 from 131, $ 6 / t to $ 142 / t against the background of an increase in the indicative price from $ 386.4 / t to $ 399.4 / t.

Forecasts of declining wheat production in Ukraine, the EU and North Africa support world prices at a high level. The EU’s Agricultural Monitoring Agency (MARS) yesterday lowered its yield estimates for most cereals and oilseeds in 2022 due to dry weather in much of Europe. Thus, compared to the May report, the estimate of the yield of soft wheat, which is the main grain crop in the EU, was reduced from 5.89 to 5.76 t / ha, which is 4.7% lower than last year and 1.3 % – an average of 5 years. At the same time, the estimate of durum wheat yield was reduced from 3.61 to 3.44 t / ha due to the deterioration of indicators in the south of Europe, which will be 2.3% lower than the average 5-year level.

In addition, MARS has lowered wheat yield forecasts in North Africa, particularly in Morocco and Algeria, below the 5-year average, in Libya and Egypt in the 5-year average, while in Tunisia above the 5-year average.

Tags: Ukraine, Russia, export, grain, Algeria, EU, prices, wheat, Tunisia, Morocco