Activation of demand from importers supports food wheat prices

This week, global importers actively held tenders for the purchase of wheat, which supported stock market quotations and purchase prices in Ukraine.

On January 17, the Egyptian GASC held the second international tender of this year, where it purchased 300,000 tons of Russian and 60,000 tons of French wheat with delivery on March 15-30 and payment 270 days after the opening of the letter of credit at an average price of $285.48/t C&F, which corresponds to the price level of previous trades.

Algeria's state agency OAIS purchased 600,000 tons of wheat (mainly from France, Romania and Bulgaria, as well as a little from the Russian Federation) at an international tender at a price of $265.5/t C&F.

On January 17, the Tunisian state agency ODC purchased 150,000 tons of soft wheat at an international tender at a price of $268.44/t C&F and 50,000 tons of durum wheat at a price of $444.89-446.49/t C&F.

The government of Lebanon this week purchased 72 thousand tons of food wheat from Ukraine at a tender for quick delivery to Beirut, in particular: 30 thousand tons with delivery on January 20 - February 15 at a price of $250.5/t C&F, 10 thousand tons with delivery on January 18 - February 18 at a price of $252/t C&F, 32 thousand tons with delivery February 5-20 at a price of $252.5/t C&F. The purchase is financed by the World Bank as part of the wheat purchase program for Lebanon due to its difficult financial situation.

In Ukraine, thanks to the stable operation of the grain corridor, freight costs and insurance risks have decreased, which increases the export demand for wheat.

In the January report, USDA experts increased the forecast of the wheat harvest in Ukraine from 22.5 to 23.4 million tons, and exports from 12.5 to 14 million tons, of which 8 million tons have already been shipped. This year, almost 60-70% of wheat had fodder quality, so the supply of food wheat is quite limited. Traders export mainly fodder wheat and very small batches of food wheat with a protein of 11-11.5%.

During the week, purchase prices for fodder wheat in Black Sea ports fell by $3-5/t to $150-157/t or UAH 6,300-6,450/t, while those for food remained at $180-185/t or UAH 7,500 UAH 7,700/t due to a shortage of offers. Given the increase in demand and the decrease in freight costs, prices may rise again.

Strategie Grains experts have lowered the forecast for soft wheat exports from the EU in 2023/24 from 32.5 to 31.7 million tons (35 million tons last year) due to low demand and strong competition from the Russian Federation. The forecast for the production of soft wheat in the EU in 2024/25 MR has been reduced from 124.8 to 122.7 million tons, which will be 2.6% lower than the previous season due to a 3.2% reduction in sowing areas.

Against the background of ship attacks in the Red Sea by the Hussites, supplies of wheat through the Suez Canal in the first half of January decreased by 40% to 0.5 million tons, which reduces the prospects for the export of agricultural products from Ukraine.