Ukraine 2021-22 wheat exports up 30% on year, prices nosedive

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The momentum of wheat exports from Ukraine firmed up over the week to Feb. 2, with overall shipments overtaking last year’s total shipments, agriculture ministry data showed Feb. 2. However, export prices nosedived due to ongoing tensions between Russia and Ukraine.

Ukraine’s wheat exports since the start of 2021-22 marketing year (July-June) through Feb. 2 stood at 17.1 million mt, up from 13.1 million mt in the corresponding period of the previous year. Ukraine shipped 16.6 million mt of wheat in MY 2020-21.

S&P Global Platts Analytics projected Ukraine will export 22.5 million mt of wheat in MY 2021-22, while the US Department of Agriculture forecast the country’s wheat exports at 24.2 million mt in its World Agricultural Supply and Demand Estimates report Jan. 12.

However, with an increase in domestic prices amid rising external demand, Ukraine is considering a 4 million mt limit on wheat exports until June to cool off domestic prices.

The government also signed a pact with traders in October to limit wheat exports to 25.3 million mt in MY 2021-22.

Ukraine harvested around 33 million mt of wheat in MY 2021-22, up from 25.4 million mt in MY 2020-21, according to the ministry.

Platts Analytics has projected Ukraine’s wheat production at 31.2 million mt for MY 2021-22. The USDA has pegged Ukraine’s wheat output for the year at 33 million mt.

Farmers in Ukraine planted winter wheat across 6.2 million hectares for MY 2022-23 as of Dec. 30, 2021, accounting for nearly 94% of the forecast area of 6.7 million hectares, according to agriculture ministry data.

Border tensions weigh on prices

Despite the increase in exports, Ukraine’s wheat export prices have softened over the month and shed more than 4% amid escalating tensions at the Ukraine-Russia border.

S&P Global Platts assessed FOB prices of 11.5% protein wheat from Ukraine at $316/mt on Feb. 1, down $3 on the day.

The two countries are major players of the global grains market and their combined wheat exports account for 23% of global total of 206.9 million mt, according to USDA forecasts for MY 2021-22.

Despite the tensions, traders expect the demand for Ukraine’s wheat to remain upbeat in the near term as Russia has restructured its export tax mechanisms and imposed an export quota from Feb. 15.

“Demand for Ukrainian wheat is likely to remain firm as the shipments from Russia may be limited after the export quota kicks in. However, there are some uncertainties due to tensions that may impact prices,” a Kyiv-based trader said.

With Ukraine running a promising export campaign in MY 2021-22, a supply tightness may also boost prices in the near term.

 

S&P Global Platts

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