Purchase prices for food wheat in Ukraine continue to rise

Purchase prices for food wheat in the ports of Ukraine are increasing against the background of increased export demand and a shortage of offers from producers.

To buy the necessary volumes before the end of the grain corridor, traders raised 2.3 grade food wheat prices by $5/t to $215-255/t, while feed wheat prices remained at $195-205/t against the background considerable supply.

In 2022/23 MR, as of January 16, 2023, Ukraine exported 8.9 million tons of wheat (16.3 million tons last year), in particular, for January 1-16 – 480 thousand tons (443 thousand tons last year), which is 69% of the forecast USDA 13 (15.3) million tons. 4.1 million tons remain free for export.

According to forecasts, the wheat harvest in 2023 will decrease compared to the current season from 21 to 12-14 million tons due to a 71% reduction in the sowing area to 3.8 million hectares due to unfavorable autumn weather and military operations in the east and south of the country. Against the backdrop of a reduced harvest in 2023/24, Ukraine may limit exports, especially if the war continues, which will support wheat prices already in the current season.

Prices for European wheat are also falling against the background of significant stocks and increased competition from the Russian Federation. According to the European Commission, in the 2022/23 financial year as of January 15, EU countries exported 17.67 million tons of wheat, which is 6% more than last year's 16.63 million tons on this date. The main exporter of soft wheat is France, which shipped 7.5 million tons, Romania and Germany - 2.01 million tons each, Latvia - 1.62 million tons, and Lithuania - 1.44 million tons.

In the January report, USDA experts increased the forecast of wheat exports from the EU by 0.5 to 36.5 (31.9) million tons. That is, 18.83 million tons need to be shipped in the second half of the season, which will be difficult to do given the decrease in activity of importers in this period.

The growth of the euro rate to the level of 1.077 $/€ reduces the competitiveness of European grain, therefore, on the Euronext exchange, March wheat futures during January fell by 4.2% to 296.75 €/t or 306.8 $/t (-7, 2% for the month), and for September wheat of the new crop - by 7.2% to €271.75/t or $293/t (-10.7% for the month) against the background of a warm winter and a good condition of winter crops.

Algeria's tender purchase of 500,000 tons of wheat, mainly of Black Sea origin, increases the pressure on prices.

In the US, stock quotes were supported by a 52% increase in exports for the week to 320.4 thousand tons and the news of Putin's announcement that storing additional wheat stocks domestically could be more profitable than exporting, as traders took it as a sign of preparations for a protracted war with Ukraine.

Yesterday, quotes rose:

• by 1% or $2.94/t to $276.2/t – March futures for soft winter SRW wheat in Chicago,
• by 1.4% or $4.4/t to $314.4/t - March HRW hard winter wheat futures in Kansas City,
• by 0.4% or $1.38/t to $336.6/t - March HRS durum wheat futures in Minneapolis,
• to $307/t - February futures for Black Sea wheat in Chicago, losing 1% for the month.