Ukrainian wheat has risen in price again: what will happen to prices in the near future?
Prices for Ukrainian wheat in August increased by $ 5 per ton.
What situation awaits Ukraine in the future, what will affect the pricing and will we see a “sinking” in wheat prices.
At the end of July, prices for wheat from the Black Sea region strengthened following the intensification of external demand.
As of August 3, the value of individual offers of Ukrainian wheat with 12.5% and 11.5% protein reached about $ 250 / ton and $ 245 / ton FOB Berdyansk for August delivery, which demonstrates an increase of $ 5 / ton versus Friday July 30, and already $ 20-23 / ton higher than the proposals in mid-July.
Many sellers are ready to conclude deals only for feed wheat, while food wheat with 12.5% and 11.5% of protein prefer to hold at least until the results of the Turkish TMO tender on August 4 for 395 thousand tons of wheat with delivery on September 16-30.
One of the factors behind the growth of world prices is the decline in the prospects for wheat production in the Russian Federation this year. The main impetus for pricing was on Monday, August 2: then SovEcon analysts lowered their forecasts for wheat production in Russia by 5.9 million tons against 76.4 million tons (this number was announced in mid-July). At the same time, in July, the US Department of Agriculture (USDA) forecasted 85 million tons.
The experts noted that this situation was favorable for Ukraine. So, the last season for many (who did not burn out the harvest) was super profitable, and now there is no traditional picture when farmers are forced to sell part of the harvest at once in order to cover their financial needs.
“In addition, from year to year, investments in the construction of our own warehouses are increasing, which also allows not to“ drain ”part of the harvest in anticipation of the next harvest (wheat, barley, rapeseed are harvested in the summer, and corn and sunflower – in the fall).
Thus, now more and more ships are approaching the ports for loading, but the farmers are not selling them.
Trading companies feel that they are “burned out” in fulfilling contracts and are forced to raise purchase prices higher and higher. The world situation, as we see, contributes to this.
Importers are shocked, because a month ago it seemed that the Black Sea countries (Ukraine, Russia, Romania) might overwhelm the market with excess supply. But now, as you can see, all the supply remains within the countries, and only in Romania there are no serious problems with a lack of liquidity.
It should also be borne in mind that those farmers who do not enter the market with price monitoring see levels in the indications much lower than traders are actually willing to pay. This is also somewhat of a deterrent.
As a result, in a couple of weeks we can see a drop in prices due to the fact that some producers still need to sell their crops; besides, the world news will be partially already “digested”. But the subsidence should not be severe and / or prolonged.
On the issues of forwarding Ukrainian grain through the ports of Ukraine, LLC Clean Sea is always glad to offer the most favorable conditions for services.
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