Black Sea flour market may undergo significant changes in MY 2021/22

Article author:

Maryna Marynych
Grain Market Analyst

Last season turned out to be difficult for flour millers in Ukraine – apart from a wheat crop decline, constant price growth in the world market also kept domestic prices at a high level.

Consequently, flour production fell by 24% y-o-y, while exports plummeted by 62%.

The prospects of Ukraine’s flour milling sector must improve in the new season due to the following factors: a rise in wheat production, a crop decline in competing countries such as Russia, Kazakhstan and Turkey.

The obstacles to the development will be as follows: in 2021, the feed wheat share in Ukraine must increase, and wheat prices at the start of the season are higher than last year.

The wheat crop outlook in Russia is vague for now. At the same time, wheat exports are still charged with a duty, whose rate changes weekly. This also makes it difficult to assess 2021/22 export potential and gives a competitive advantage to Ukrainian wheat in common export markets.

Wheat plantings in Kazakhstan also got exposed to extreme air temperatures with no precipitation – this may adversely affect the size of the future crop. The future consequences for milling wheat are still difficult to assess, but there are no more doubts that the wheat crop in Kazakhstan will be smaller than last year.

The wheat crop decline will entail a drop in both wheat flour production and exports. In view of rather poor crop outlooks in the neighboring competitor countries, Ukraine may enhance its position in the world wheat flour market, UkrAgroConsult reports.

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