Agricultural market: the beginning of July in Ukraine complicates the blockade of the Grain Agreement
13.07.2023 - 17:30
According to analysts’ forecasts, the sale prices of Ukrainian wheat of the new crop will be higher than last year’s. Farmers plan to sell grain at least $200 per ton. USM analyzed current prices on the Ukrainian and world markets.
Beginning of July 2023
According to Incoterms (EXW or Ex Works), purchase prices for agricultural crops of Ukraine have been at a stable level since the end of May. Last week, prices showed minimal fluctuations on the grain market.
The price mostly decreased (ed. note: a maximum of -0.46%) due to the low activity of buyers in the domestic market and problems with exports that arose as a result of restrictions in some EU countries and due to the blockade of the Grain Agreement by the Russian Federation.
Read also: “Plan B” for Ukrainian agricultural exports.
Prices
As of the beginning of July, the price of Ukrainian wheat is UAH 5,000/t. The price of barley is a little cheaper – UAH 4,250/t. Corn is more expensive – UAH 5,400/ton.
At the same time, the highest indicators were recorded in May – then wheat cost UAH 5,200/t, barley – UAH 5,100/t, corn – UAH 5,750/t.
According to the monitoring portal Tripoli.land, at the beginning of July, a ton of grain crops costs:
Wheat — UAH 5,134/t;
Wheat (class 2) — UAH 5,632/t;
Wheat (class 3) — UAH 5,607/t;
Corn — UAH 5,290/t;
Barley — UAH 4,227/t;
White sorghum — UAH 4,237/t;
Yellow peas — UAH 5,824/t;
Soy — 16,277 UAH/t;
Rape — 11,349 UAH/t;
Sunflower — UAH 12,986/t.
Current data on the new harvest
In June, 70% of the wheat exported from Ukraine was the old crop. As of July 13, the supply of grain begins to decrease.
According to the ll-Ukrainian Agrarian Council, wheat stocks are currently minimal. Among the new harvest, only about 200,000 tons have been collected so far.
“Among all agricultural crops, wheat reacts the most to the news about the extension of the Grain Agreement and is the most “politicized”. According to forecasts, Ukraine will collect 14-15 million tons of wheat by the end of July. Then, against the backdrop of a large supply, prices may temporarily decline, but already in September they will be at least $200/ton,” analysts of the All-Ukrainian Agrarian Council believe.
News about Russia’s possible exit from the Grain Agreement may affect wheat prices, keeping them at their current level.
Given the forecasts of the gross harvest of wheat, Ukraine will be able to export about 1 million tons per month.
Ukrainian farmers plan to sell grain no cheaper than $200/ton, as the costs of growing wheat have increased, as have the risks.
World forecasts
In a July report, USDA analysts lowered the forecast for world wheat production in FY 2023/24 to 796.6 million tons. In June, according to forecasts, the figure was supposed to be 800.2 million tons.
In particular, experts adjusted the data on the wheat harvest in the EU – the figure decreased from 140 to 138 million tons.
In Canada – from 37 to 35 million tons, in Argentina – from 19.5 to 17.5 million tons, in Great Britain – up to 15.5 million tons, and in Iran – up to 14 million tons.
Production prospects have increased for Pakistan – from 26.8 to 28 million tons and for the United States – from 45.3 to 47.3 million tons.
At the same time, analysts of the Ukrainian Universal Exchange (UUB) noted that there were significant price fluctuations on the world market. On the Chicago Stock Exchange, wheat futures initially rose due to a slow U.S. winter wheat harvest and weather threats in Canada and China.
“But during the week, wheat futures adjusted their direction downwards. The upside potential for corn prices is currently limited due to increased acreage. The low amount of precipitation in the EU, which is below the norm, will not significantly affect the overall size of the crop,” the analysts emphasized.
USM previously reported that USAID will provide Ukraine with UAH 367 million to support the agricultural sector.
