Wheat prices in Ukraine remain low, despite the rapid growth of stock market quotes

Last week, the growth of wheat quotations on world exchanges accelerated due to the lack of prospects for the resumption of wheat exports from Ukraine and the Russian Federation.

 

During the week, quotes increased by 4.2-11.2%, with futures for soft wheat (the quality of which is the same as Black Sea wheat) in Chicago increasing by 11% in the week and by 20% in the month. However, due to high prices, the export rates of American and European wheat are 26 and 49% lower than last year, respectively, which indicates low demand.

 

September wheat futures rose during the week:

• by 11.2% to $278/t - for soft winter SRW wheat in Chicago,
• by 9.2% to $301.4/t - for durum HRW wheat in Kansas City,
• by 6.4% to $271.6/t - for spring HRS wheat in Minneapolis,
• by 4.2% to €237/t or $275/t for soft wheat on Euronext in Paris.

 

Wheat exports from the US from June 1 to August 27 amounted to only 4.78 million tons, which is 28.4% lower than last year's pace.

 

It should be noted that hard spring wheat in the US is currently trading cheaper than soft wheat, which also confirms the significant speculative component of quotes in Chicago.

 

In Ukraine, during the week, export purchase prices for wheat in Danube ports remained at the level of 8,000-8,500 UAH/t or 160-170 $/t for food wheat and 7,500-8,000 UAH/t or 150-155 $/t for feed wheat due to increased shelling and increased logistics costs.

 

Demand prices for food wheat on the Ukrainian-Romanian border increased by $2-5/t to $150-155/t or UAH 8,000-8,200/t, and with delivery to Constanta (Romania) - immediately by $10-15/t to $245-255/t, which will continue to support export demand for wheat.

 

Processors in Ukraine maintain demand prices for food wheat at the level of 6,700-7,200 UAH/t with delivery to the mill and purchase mainly high-quality grade 2 wheat.

 

At the same time, demand for grade 4 wheat with 10-11% protein on FCA terms has increased - loaded into containers at a price of about UAH 6,500-7,000/t, which also keeps domestic prices from falling.

 

Turkey is actively seeking ways to negotiate and insists on the creation of the Black Sea shipping corridor to resume grain exports from the Russian Federation and Ukraine, since if supplies are delayed for another 2 months, Turkish processors will be forced to raise prices.

 

Also positive for the markets were yesterday's meeting between Putin and Chinese leader Xi Jinping at the SCO summit, after which Putin stated that Russia is moving towards ending the war with Ukraine, as well as the meeting of the US delegation led by US Treasury Secretary Scott Bessant and the delegation from Russia. Against this background, we expect a decrease in stock quotes and stabilization of prices in Constanta this week.