Purchase prices for wheat in Ukraine are under pressure due to a decrease in export demand
Long delays of ships in the Black Sea ports in Ukraine have a negative impact on the purchase prices of wheat in the country. Deliveries to the western borders also decreased due to lower prices from European consumers, which led to a decrease in purchase prices from Ukrainian processors.
About 140 vessels are waiting for inspection and permission to enter the Black Sea ports of Ukraine, which continues to increase queues, and almost all terminals do not accept wheat. Traders are not buying grain due to uncertainty with vessel approaches and the continuation of the grain corridor after March 19.
Export purchase prices for food wheat of class 2.3 in the ports of Ukraine fell to $205-215/t during the week, and prices for fodder wheat to the level of $185-200/t.
Prices for the purchase of Ukrainian wheat decreased for European consumers to the levels of about $210-225/t DAP on the border of Poland and Slovakia, as well as to the levels of about $275-285/t DAP in the ports of Romania. The decrease in the cost of road transportation to European consumers by $20-30/t led to an increase in the supply of Ukrainian wheat to the EU at low prices, which caused protests by local farmers due to dumping.
Against the background of low export demand and problems with the sale of flour and bran for export, Ukrainian processors also reduced the prices for the purchase of wheat of the 2nd and 3rd class by 200-300 UAH/t, reducing them to the levels of 7000-7400 UAH/t, and the prices of fodder wheat decreased to UAH 6,300-6,500/t.
As of February 16, 2023, Ukraine has already exported 10.5 million tons of wheat from the USDA's forecast of 13.5 million tons. About 3 million tons remained for export, and 800,000 tons were exported in just two weeks of February. This suggests that the planned ships for loading in the coming month will take another 1.5 million tons of wheat. If the grain corridor is preserved, the export market will get a "second wind" and the demand for wheat will recover. However, it may face stiff competition from rising Australian and Russian wheat supplies.
In December 2022, according to the estimates of experts of the Australian Bureau of Statistics, 2.66 million tons of wheat were exported from the country, which is 50% higher than the figure of the previous month. The main volumes of wheat were shipped to China, South Korea and the Philippines. Further growth in exports is expected in January and February. However, export volumes may depend on the operation of the "grain corridor" in Ukraine. In general, in the first half of 2023, wheat exports from Australia may reach 21.3 million tons.
The Indian government is expecting a record wheat harvest this year, which will help restore domestic stocks and lower wheat prices in the domestic market. However, the extension of the ban on the export of wheat from the country is being considered.
