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Wheat price in Ukraine
Prices for agricultural crops
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‘BLACK SEA VEGOIL’
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‘BLACK SEA GRAIN & OILSEEDS’
The price of 1 ton of wheat in Ukraine
The export of grain crops is one of the important components of the Ukrainian economy. In recent years, the country has been included in the list of the world’s largest exporters, and the price of wheat in Ukraine remains attractive for many countries, including Asian and African ones.
The agricultural market of the country is represented by a large number of companies specializing in the cultivation and sale of grain. Thanks to favorable climatic conditions and constant improvement of production capacities, Ukraine has established itself as one of the leading agrarian countries, offering high-quality agricultural crops at an affordable price.
The price of wheat in 2022 is largely determined by Ukrainian farmers. The current price takes into account the peculiarities of growing and harvesting, its transportation by land and sea. How is the cost of this agricultural crop formed per ton? We will talk about the situation on the Ukrainian grain market below.
How do the price and sale of wheat affect economic indicators?
Wheat is a key crop that Ukraine exports abroad. Its supply, the volume of which depends on the price, directly affects the investment climate in the field of agro-industrial complex. Moreover, it is safe to say that the purchase and sale of milling and feed wheat is the basis for the adequate functioning of the grain sector.
Numerous market subjects participate in the process of grain production and sale:
- grain trader
- agricultural enterprise;
- transport forwarding company;
- fumigation organization;
- grain terminal;
- industry association.
The price per ton of wheat is the result of communication between all the listed industry participants. The main topic of discussion is this year’s harvest. Taking into account its volume, representatives of the agro-industrial complex form prices per ton of wheat and purchasing conditions.
Stable high demand for wheat
Annual reviews of the agricultural market show that Ukrainian wheat remains in demand in many countries of the world, including African and Asian countries. In addition to productivity, the following parameters affect the cost:
- exchange rate fluctuations (US dollar, euro);
- geopolitical situation in the world;
- region and weather conditions;
- activity of grain traders;
- peculiarities of logistics, etc.
The main way for Ukrainian grain exports is by sea. Therefore, it is important to carry out modernization of ports, improving local infrastructure, reducing cargo handling time and reducing transport costs.
How the price of wheat is determined
If you compare the indicators for recent years, you can see that the price of wheat changes significantly over the course of a year. Detailed analysis allows to reveal the influence of many parameters of each class of grain. The main ones are:
- price calculation with or without VAT;
- type and quality of grain;
- ratio of standard indicators (protein and gluten);
- processing, storage, transportation of wheat;
- starting price of purchasing wheat in the new season.
What are forward contracts?
Grain trading has a number of features. In particular, it should be noted the conduct of forward agreements. Why is wheat bought in this way quite often?
As part of this common practice, the buyer gets the opportunity to order the right amount of products at the right price before the harvest. The full range of works, which includes a continuous cycle of cultivation and harvesting of agricultural crops, is partially financed through forward agreements.
How is the price of wheat set in this case? It is closely related to the following parameters:
- expected demand from potential buyers
- the cost of other grain crops;
- the dynamics of the price of wheat for the year compared to the previous season;
- availability of milling and feed wheat residues in storage, which may be of interest to the feed mill.
Wheat is a sought-after commodity characterized by a dynamically changing price. The quantity, quality and cost of bread products will depend on it in the future.
How has the price of wheat changed this year?
Within the country, the price of raw materials remains at the lowest possible level, subject to transportation to the mill. Ukraine offers its citizens to buy wheat for an average of 240–260 dollars per ton.
As for the export price, it has increased significantly and reaches 350–380 dollars per ton. What factor was the cause of this phenomenon to a greater extent?
Wheat has become more expensive for foreign buyers due to both a reduced crop and supply problems. To date, not a single Black Sea city is able to provide a full-fledged shipment and transportation of wheat, which was usual for the past years. It is expected that Ukraine will be able to use Bulgarian and Romanian ports in the near future. However, before this, the countries have to complete operations with their own wheat. It is impossible to predict exactly how the price of agricultural crops will behave in such conditions.
Forecasts of experts
According to analysts, the year 2022 will be marked by a harvest of grain and oil crops in the volume of about 66 million tons. According to preliminary calculations, wheat will be actively harvested on the territory of about 19 million hectares.
The projected export should be up to 30 million tons of raw materials. A mandatory condition for this is the growth of throughput at the border. It should increase at least twice.
According to agricultural experts, wheat will not be able to beat the record harvest of 2021. The harvest of this agricultural crop will decrease by one and a half times on average. However, it still exceeds three times the amount of raw materials needed to cover the country’s needs. The price for domestic consumers remains acceptable.
In order for wheat to become available to foreign buyers, a powerful alternative to shipping by sea must be found. In this, both technical and organizational obstacles should be eliminated. Thanks to the integrated approach, the price of raw materials will not change significantly.