Seasonal pattern has broken: Ukraine’s wheat prices aren’t rising as they should

In November, wheat exports from Ukraine amounted to only 1.706 million tons, and this pace is considered low. Seasonal factors continue to dominate, but the dynamics of wheat prices is somewhat different from the usual. This was reported by the analytical department of the agricultural cooperative PUSK, created within the VAR.

“The current phase of the season is traditionally characterized by a minimum of news, because all the key parameters of the harvest have long been known, and information about the state of the new harvest appears only after February. That is, there are few informational reasons for prices to change,” analysts note. The new driver of prices could have been sowing, but its influence was offset by favorable weather conditions. “The condition of the winter crop is assessed as good, there is enough moisture, and forecasts promise additional precipitation. The plants will enter the winter in normal condition. No problems have been recorded yet. That is why the risk factor of sowing, which could raise prices, no longer affects the market,” the PUSK explains.

However, the price situation on the market currently looks unusually calm. “Traditionally, in November-December, the price of wheat moves up, as importers return to the market after summer purchases. But this season the market has been stagnant for two months. In October, the conditional price was $220/t CPT port for grade 3, in November — $220–222, and December began in the same corridor. This season, the price of wheat is behaving differently than usual,” analysts comment.

Importers’ demand for Ukrainian wheat has begun to appear, but activity is low. “Last week, purchases were made by Egypt, Lebanon and EU countries, but there is no excitement. This is what is holding back prices. The market usually reacts to such a “pause” with a sharp movement in one direction or another, but the probability of growth is much higher. According to the seasonal model, the price potential is $245–255/t CPT port during the peak activity period — from January to March,” the PUSK believes.

In the short term, the market will remain stable.     “Conditional prices per ton will remain at $220 for food wheat and $212–214 for feed wheat. The market will spend the coming weeks in “waiting mode,” analysts summarize.

Tags: Ukraine, prices, wheat