Ukraine’s 2021-22 wheat exports up 26% on year as of Dec 20, prices weaken further

Ukraine’s wheat exports were more than 26% higher year on year at 15.4 million mt through Dec. 20 since the start of the 2021-22 marketing year July 1, data released by the country’s agricultural ministry showed Dec. 21.

Wheat exports from Ukraine have been gathering momentum over the past few months, as export tariffs imposed on the Russian crop have been increasing sharply, traders said.

However, the export prices of the Ukraine’s wheat continued to weaken, despite an increase in shipments.

S&P Global Platts Analytics projected Ukraine to 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 latest World Agricultural Supply and Demand Estimates report released Dec. 9.

Ukraine had shipped 16.6 million mt of wheat in MY 2020-21. Its government signed a pact with traders in October to limit wheat exports to 25.3 million mt in MY 2021-22.

Farmers in Ukraine had planted 6.2 million hectares of winter wheat for MY 2022-23 as of Dec. 2, accounting for nearly 94% of the forecast area of 6.7 million hectares, according to data released by the country’s agriculture ministry.

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’s statement.

Platts Analytics has projected Ukraine’s wheat production at 31.2 million mt for the current July-June marketing year. The USDA has pegged Ukraine’s wheat output for the year at 33 million mt.

Export prices of Ukraine have shed nearly 4% over the past month, despite continued increase in outflows.

S&P Global Platts assessed FOB prices of 11.5% protein wheat from Ukraine at $327/mt on Dec. 20, down $2.5/mt from Dec. 17.

However, traders expect the demand for Ukraine’s wheat to rise in the near term as Russia restructured its export tax mechanisms and introduced an export quota on Dec. 17.

“Demand for Ukrainian wheat is likely to increase from middle-eastern nations as the supplies from Russia may tighten further,” a Kyiv-based trader told Platts.

According to the new regulations, the export tax will have a higher multiplier if wheat prices reach $375/mt, while the tariff will increase further if the prices reach $400/mt.

The export tax on Russian wheat is calculated as 70% of the difference between the average of export prices on FOB basis during the 60 days preceding the day of calculation and $200.

The Russian government may also take further action to limit food inflation in the domestic market.

To check the domestic price rise, Russia has also set the export quota for wheat at 8 million mt between Feb. 15 and June 30.

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

Tags: wheat exports, demand, S&P Global Platts, export tariffs, export prices, Ukraine, wheat