Decreased wheat production in Ukraine and globally, as well as reduced stocks, will be significant factors behind the record growth of food grain prices in the new season. Weather risks could be a decisive factor in maintaining the upward trend.

This was discussed during the analytical briefing of the First Ukrainian Agricultural Cooperative (FUAC) cooperative, created within the UAC.

“The supply of wheat will decrease significantly in the new season. Ukraine's stocks do not exceed 5 million tons, while last year at this time they amounted to 8 million tons. In May, 1650,000 tons were contracted for export. According to the first estimates, production will not exceed 19-20 million tons, compared to 23 million tons harvested last year. Accordingly, Ukraine will be able to export no more than 13-14 million tons in the new season. The EU expects wheat production to decline by 10 million tons, and the US also expects a decline. In Russia, predictions of a record harvest have shifted from expectations of a decline in production. In some countries, the predictions are lowered due to the weather, and in particular in the United States, wheat was not profitable for farmers, so it was sown less. As stocks and production are declining, we have minus 2-3 million tons of export potential in Ukraine - these are objective factors for wheat to be more expensive in the new season. Prices at USD 200-210 per ton of food wheat will be the minimum that we’ll see in the fall and winter. Weather risks will additionally “push” both the exchange and traders,” the FUAC mentioned.

According to the analysts, demand and prices for food wheat are already rising, and buyers are accumulating stocks. Another factor that contributes to the intensification of trade in Ukrainian wheat is cheaper logistics.

“Recently, the freight price has been losing USD 2-4 per ton every week. This has a positive impact on wheat prices on the CPT market. As a result, we see an increase in grain trade. Let me remind you that May-June are often marked by downward trends in the physical market, especially on the CPT basis. However, in the new season, as already mentioned, food wheat may reach record prices, which will happen not earlier than September,” the FUAC added.

By the end of this week, the conditional prices for wheat on CPT basis will be USD 190-195 in shallow water ports, USD180-185 in deep water ones. And also USD 205-210 per ton on DAP/CIF Constanta.