Wheat prices in Ukraine may rise due to low stocks
As of September 1, Ukraine’s wheat stocks amounted to 18.7 million tons, which is significantly lower than the average annual figures of previous seasons, when this figure exceeded 20 million tons. This was reported by analysts of the agricultural cooperative PUSK, established within the framework of the VAR.
“The Ministry of Agrarian Policy and grain market participants signed a Memorandum stating that Ukraine will not export more than 16 mln tons of wheat. If we continue to export 2 million tons per month, we may have enough wheat until March-April. But objectively, there will be little wheat for export, and usually the price rises when the supply decreases,” the analyst comments. Experts note that in August the market remained stable due to forward contracts, but in September the situation is beginning to change. “Traders report that the supply of wheat is low, and if in August they managed to hold on due to forwards, in September there are almost no forwards. The market will work on spot transactions,” the PUSK said.
There are also factors on the global market that can affect the price of wheat. The market is waiting for the new USDA report and correction of data on wheat production in the EU. The differences in estimates are significant, as the USDA’s estimate of European wheat production at 128 mln tonnes is significantly higher than the European Commission’s data, which estimates production at 116.2 mln tonnes. In addition, the situation in Argentina, where there are problems with soil moisture due to drought, may also negatively affect the global wheat balance.
“In the second half of September, the price of third-grade milling wheat may rise to 200-205 USD/t on the CPT market, even if the world prices remain stable. If the current situation continues, domestic prices may also rise significantly,” the analyst predicts.
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