Ukrainian wheat exports to the EU may decrease to 1 mln tons

The Ukrainian agricultural market is preparing for significant changes, as wheat exports to the European Union may decrease from over 6 million tons to only 1 million tons. This was stated by the commercial director of Spike Brokers Oleksandr Solovey in a comment to Latifundist.com.

According to him, most market participants are already taking these changes into account in their strategies. Europe remains an important trade destination for Ukraine due to its short logistics arm and high consumer solvency. But if access to the EU market is limited, traders will have to reorient themselves to more distant destinations, which will lead to an increase in logistical and financial costs.

“This will significantly affect those who will be engaged in this. It is one thing to load the costers and handicaps to the nearest markets, and this requires one financial burden, and another thing is to seek logistical optimization and load it with large transitions, which requires greater financial resources, and these are completely different requirements for trade. Therefore, let’s say, this is more of a game for international companies that have fewer barriers to financial resources. Therefore, this will significantly affect the market situation,” Solovey explained.

He said that while Ukraine focused on supplies to the EU, Russia has intensified its presence in Asian directions, taking advantage of the decline in Ukrainian exports. In addition, technical barriers have already been introduced in some countries for Ukrainian grain – for example, the requirement to ship not from Ukrainian ports, but through Romania or Bulgaria.

Solovey notes that Ukraine will have to return to the markets it lost, which means dumping.

“Any companies that open offices in Ukraine always lose in the first few years, because you need to invest in your presence, invest in customer loyalty. The same goes for sales markets. You enter the sales market, you need to invest in your presence so that you are perceived. And this means lower prices and worse conditions for the seller, but better for the buyer,” Solovey added.

Tags: export, EU, wheat