The delay of the vessels reduces the demand for wheat in Ukraine, but prices have the potential to rise

Against the backdrop of significant shipping costs, demand prices for wheat in Ukrainian ports remain at the level of $200-240/t FOB, although world prices reach $290-330/t FOB. Recently, representatives of the Russian Federation conducting a joint inspection of ships that are heading through grain corridors deliberately slow down the inspection. This increases the idle time of vessels and, accordingly, the cost of their freight. Due to the delay of the ships, some terminals have stopped accepting wheat, as traders buy only those consignments that are guaranteed to be shipped by mid-November.

However, wheat prices are unlikely to decrease even if the corridors are closed, as demand at the western borders remains high, and the established exports through the borders and ports of the Danube will allow at least 2 million tons of grain to be shipped per month.

Farmers began to hold back wheat sales amid a significant delay in planting caused by prolonged rains in September. As of October 3, only 1.1 million hectares, or 27% of the planned area, have been sown with winter wheat in Ukraine compared to 3.1 million hectares last year, but the optimal sowing time will end on October 10. Analysts predict that in 2023, due to the delay in sowing and fighting in the east and south of the country, the wheat harvest will decrease compared to the current year from 19 to 15-17 million tons.

The low activity of importers against the background of a significant supply of Russian wheat keeps demand prices at the level of $340-370/t C&F. But tenders will be held this week, which can give an impetus to the growth of wheat prices.

• Jordan postponed the tender for the purchase of 120,000 tons of wheat from October 4 to October 11 due to the high prices of the offers.
• On October 5, Iraq held a tender for the purchase of 50,000 tons of wheat, where the cheapest offer was a batch of Ukrainian wheat with a price of $386/t C&F.
• On October 4, Tunisia announced a tender for the purchase of 150,000 tons of soft wheat and 100,000 tons of durum wheat and fodder barley, and the cheapest lot is offered at $384/t C&F.
• Algeria announced a tender for the purchase of 50,000 tons of wheat.

Exports of wheat from the EU are slowing down and as of October 2 amounted to 9.15 million tons (9.48 million tons on this date last year), although a week ago it was ahead of last year's pace. The main buyers remain Algeria (14%), Morocco (13%), Egypt (9%), Nigeria (8%) and Pakistan (5%).

SovEkon experts increased the forecast of wheat production in the Russian Federation to 100 million tons, and exports to 43.4 million tons (76 and 38 million tons last year, respectively). Due to low export rates at the beginning of the season, shipment rates are 14% below the 5-year average.

In addition, the delay in the payment of more than 800,000 tons of wheat purchased by private importers, which is in the ports of Egypt, is putting pressure on world prices, since the Central Bank of the country allocates currency reserves primarily for the payment of strategic goods and the payment of foreign debt obligations.