Declining wheat quotes reduce export demand in Ukraine

The decline in wheat exchange prices, especially in the USA, where the weather is conducive to sowing spring crops and developing winter crops, has sharply reduced export demand in Ukraine.

During the week, export prices for food wheat in the Black Sea ports of Ukraine remained at the level of 10,950-11,200 UAH/t or 234-236 $/t, and for feed wheat – 10,550-10,600 UAH/t or 225-226 $/t. Traders are more interested in food wheat, while demand for feed wheat is falling, and the price difference between them has grown to 10 $/t, which is quite unusual, since in recent years feed wheat has been used for mixing in export batches, rather than for direct export.

During April 1-28, wheat exports from Ukraine amounted to only 628 thousand tons (1.7 million tons for the same period last year), and in total for the season reached 13.75 million tons, which is 13% lower than last year’s pace.

Declining world prices are limiting the growth of purchase prices in Ukraine, although farmers are holding back sales due to uncertainty about the new harvest amid drought.

As of April 24, domestic farmers had sown 200 thousand hectares with spring wheat, or 88% of the planned 227.5 thousand hectares, but the lack of effective precipitation does not allow increasing the sowing area.

July wheat futures fell yesterday:

• by 2.7% to $195.1/t – for soft winter SRW wheat in Chicago (-0.9% per week),
• by 2.1% to $198.3/t – for durum winter HRW wheat in Kansas City (-1.1%),
• by 1.6% to $218.8/t – for durum spring HRS wheat in Minneapolis (+0.2%),
• by 1.6% to €206.5/t or $235.4/t – for wheat on the Euronext exchange in Paris (-1%).

The quotes are being pressured by data from the weekly Crop Progress report, according to which, as of April 27, 30% of the area in the US was sown with spring wheat (21% on average for 5 years), and the number of winter wheat crops in good or excellent condition increased by 4% to 49% (49% last year) during the week.

Wheat exports from the US increased by 26.5% to 646.5 thousand tons during April 17-24, and in total for the season reached 19.46 million tons, which is 14.9% higher than last year’s pace. Apparently, by June 1, it will be possible to reach the USDA’s forecast of 22.3 million tons.

According to the European Commission, in the MY 2024/25 (as of April 20), the EU reduced its exports of soft wheat compared to the previous season by 34% to 17.1 million tons due to higher prices than competitors, so it is unlikely to be able to export the USDA-projected 26.5 million tons by the end of the season. Wheat imports to the EU decreased by 14% to 6.62 million tons and will decrease even more after June 1 due to restrictions on wheat supplies from Ukraine.

Prices for May deliveries of Russian wheat with 12.5% protein fell by $1/t to $249/t FOB in a week after prices for Romanian wheat fell by $1/t to $247/t, French wheat by $2/t to $242/t, American wheat by $5/t to $226/t, and Argentine wheat by $3/t to $247/t.

Active sowing of spring wheat in the USA and Russia and rains in the main winter wheat growing regions are increasing pressure on the wheat market.