Ukraine. Wheat exports hit record high, but farmers’ profits plummet

In March, Ukraine exported 1.1 million tons of wheat — one of the highest monthly figures of the current season. In April, the volume of supplies may be slightly lower, but will still remain at a high level.

This was reported by the analytical department of the agricultural cooperative PUSK, created within the framework of the VAR.

“850 thousand tons of wheat have already been contracted for April. The export volume may reach 1 million tons. Despite the general stagnation of demand on the European market, Ukrainian grain is finding its buyer, in particular in Egypt,” PUSK notes.

However, from a price point of view, the situation is less optimistic. The main export destinations — Italy, Spain, the Netherlands — maintain a passive position regarding new purchases, and the return of duties on Ukrainian grain to the EU from June may further complicate market access.

“There is no positive news for the price of wheat yet. The stock market has been slumping in recent weeks, and we see a serious gap between the physical market and stock quotes. If the FOB price in Ukraine is currently higher than Chicago by $60 per ton, then by June-July the markets usually synchronize. This means that the Ukrainian physical price may slump, especially given the approaching new harvest,” comments “PUSK”.

According to analysts, the conditional average price for the new second-class harvest for July is forecast at $190–200 per ton on a CPT-port basis, while the current figure is fixed at $210–215. The potential decrease could be up to $20 per ton.

“If there is an opportunity, you should not rush into selling. Historically, in July-August, the market is saturated with wheat from all major exporting countries — Ukraine, Russia, Romania, the USA — and even with a deficit balance, the price usually falls. At the same time, the seasonal model shows that from October to December, an increase to $220–235 per ton on a CPT-port basis is possible. Therefore, if the financial cushion allows, it is worth considering postponing sales,” analysts add.

In the domestic market, flour milling companies are currently offering the best prices — UAH 10,500–11,000/t of second- and third-grade wheat. In conditions of sluggish export demand, this may be a more profitable solution for farmers.

Tags: Ukraine, export, wheat