Purchase prices for wheat in Ukraine are growing again, but only because of the growth of the dollar exchange rate

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The resumption of activity in the grain market of Ukraine after the New Year holidays was marked by a sharp increase in purchase prices for wheat and corn, but the main growth factor was the continued decline in the hryvnia exchange rate against the dollar by more than 1% in a week. Purchase prices for food wheat in Ukraine increased by 150-200 UAH/ton to 9550-9700 UAH/ton, or 3 308-312/ton for delivery to the port amid a decrease in supply from farmers for the New Year holidays. Wheat exports from Ukraine as of January 10 reached 16.1 million tons, which is 27% more than a year ago, but it should be borne in mind that the forecast for wheat exports this season is 45% more compared to last year.

Wheat quotes on world stock exchanges have been declining since the beginning of the new year, but on the eve of the release of the January supply and demand report from the USDA, traders slightly stepped up purchases, and yesterday the quotes rose slightly.

Analysts disagree: some predict a decrease in the forecast of world wheat stocks at the end of 2021/22 mg by 3.2 million tons, others an increase of 2.8 million tons, but in general the average estimate is 278.7 million tons, which is only 0.5 million tons more than in the December report.

In our opinion, the USDA will increase its forecast for global production by 2-3 million tons and wheat stocks by 2 million tons due to the correction of data for Australia, Argentina and Russia.

March Black Sea wheat futures on the Chicago Stock Exchange in the last week of 2021 and in the first week of 2022 fell by 2 20/ton to 3 326/ton, but this week in two sessions added 4 4.5/ton to.331/ton.

March European wheat futures on Paris ‘ Euronext rose 1.25 €/ton yesterday to 276.75€/Ton (3 314.8/ton), but the euro’s appreciation against the dollar will limit further price growth.

Soft wheat exports from the EU in 2021/22mg as of January 9 reached 15.11 million tons, which is 6.5% more than a year ago, and these data already include also missing data from France, but it is worth noting that the forecast for wheat exports from the EU is 37 million tons against 29.7 million tons last year, and for the second half of the season traders will still need to ship about 22 million tons, which is quite problematic especially against the background of lower world prices.

The Algerian state-owned company OAIC this week will hold a tender for the purchase of at least 50 thousand tons of flour wheat for delivery in February-March 2022, which will support prices for European wheat.

The grain agency of Turkey (TMO) is holding a tender that will close on January 18 for the purchase of 335 thousand tons of red grain flour wheat of any origin with delivery from February 10 to March 10, 2022, which will also provide additional price indicators for Black Sea wheat.

 The US Department of agriculture today will give the first forecast on the area of winter wheat sowing in the United States, and traders expect an increase of 700 thousand acres to 34.3 million acres. Analysts also expect that forecasts for wheat stocks in the United States will also increase against the background of low export rates.

During the week ended January 5, only 233 thousand tons of wheat were inspected from the United States for export, and the total export since the beginning of the season (June 1) is only 12.4 million tons, which is 23% less than a year ago with a forecast for this season of 22.86 million tons (27 million tons in 2020/21).

March US futures rose yesterday:

  • by 3 3.03 / ton to Чикаго 283 / ton for soft winter wheat in Chicago;
  • by 4 4.96 / ton to 2 290.9 / ton for winter durum wheat in Kansas City;
  • by 5 5.14 / ton to.341.1 / ton for hard Spring HRS wheat in Minneapolis.

 

GrainTrade 

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