Ukrainian Grain Market
AGRO PERSPECTIVE «Ukrainian Grain & Oilseed Market » 58 (161)
Food wheat prices sharp growth has somewhat slowed within this week, though boosting tendency remains. Traders didn’t make any real milling wheat purchases; traders purchase prices were just declarative.
Wheat was purchased only in small lots by a few companies mainly from their regular suppliers. Upon whole, exporters trade activity was zero low as exporters waited for Government decision on quotas raising/licensing regime prolonging until this year Jul 31. However, taking into consideration that Government draft Decree declares just «symbolic» figure of possible wheat export quota rise, — up to 293,000 MT (+ 3,000 MT), only processors are certain to remain market key players in short run.
Feed wheat prices range has once again narrowed as prices lower margin slightly boosted. Within this week there was no one willing to sell feed wheat below UAH1,200 per MT. Grain holders, after having made sure that consumers purchased wheat even at high prices, have once again raised offer prices.
Feed barley sector activity was slightly up against previous. Activity growth is to be explained with 2 reasons: firstly, weather conditions improvement (temperature rise) resulting in grains storage expenses growth; secondly, traders were obliged to push down barley export (and, correspondingly, domestic) prices within previous quota limits as Ukrainian barley main importers had lowered purchase prices. Therefore, even if Cabinet raises barley export quota up to 900,000 MT, grain holders who will keep their reserves unsold until Apr are hardly possible to gain.
Feed maize market conjuncture remained same as within previous week. Practically all export-orientated companies retained their purchase prices unchanged; processors (in part., mixed feeds plants) have sometimes boosted purchase prices to UAH1,350 per MT (CPT plant). Experts affirm if maize export quota is raised from 600,000 MT to 1.8 mn MT as planned with Government draft Decree, feed maize market activity will be much up.
EXPORT
Within this week feed barley purchase prices ranged within UAH1,220–1,270 per MT (EXW-ex-elevator, depending on regions/contract conditions). US$ purchase prices were US$305–315 per MT (FOB).
Feed wheat prices were UAH1,200–1,270 per MT (EXW-ex-elevator).
Feed wheat ports US$ purchase prices ranged within US$290–300 per MT (CPT port).
FOB offer prices fluctuated within US$300–310 per MT (FOB).
4 class food wheat US$ prices (taking into account global market prices current conjuncture) equaled to US$340–350 per MT (CPT port).
Maize
Traders purchased feed maize at UAH1,170–1,240 per MT (EXW-ex-elevator). Feed maize US$ prices were " US$275–285 per MT (CPT port)/US$285–295 (FOB).
Many processors admit within this week wheat offers number was slightly up as of previous week. However, part processors (mainly in southern regions) have suspended wheat purchases due to having accumulated necessary reserves and being unready to purchase grains at currant market prices so far. At same time, another part processors (which haven’t accumulated enough resources yet) were obliged to search for necessary grains lots all by themselves and gradually raise purchase prices due to necessity of milling lots forming.
Most agricultural producers, after having known that Government decided to raise only barley and maize quotas (correspondingly up to 900,000 MT and 1.8 mn MT), tried to sell off wheat surpluses at currant high prices.
However, grain holders tried to limit a bit maize sales until export quota uncertainty is clarified. If Government raises quota, traders will renew maize purchases resulting in market prices new growth; otherwise, agrarians will have to sell their reserves at currant market prices as maize further storage isn’t expedient due to quality significant lowering.
Earlier, Government had declared any additional measures would be adopted only after country grains balance is thoroughly examined in order to determine grains export possible volume. Now, it is already clear that quotas will be raised; yet only Cabinet session will determine how much quotas will be raised.
Grain holders aren’t going to low their goods sale prices in short run despite sowing campaign approaching/purchase offers growth, — what has much disappointed flour producers as they expected for prices lowering.
Processed Products
As of this week results, flour sale rates remained stable; however, sale rates shortening tendency has already emerged due to flour millers having much grown sale prices.
In some regions wheat flour offer has boosted with prices range being rather wide to permit consumers choosing most advantageous purchase conditions. As a result, many big producers were unable to significantly raise sale prices despite wheat resources high cost.
Part producers which had earlier succeeded to retain sale prices unchanged have boosted ready products prices by UAH100–200 per MT.
Bakeries purchased flour either up to earlier concluded contracts or correspondingly to production needs, due to bakeries didn’t try any more to form big resources and owing to consumers demand being somewhat restrained with bakery products currant sale prices.
As to market operators, wheat export will be limited and therefore, under favorable circumstances, milling grain prices will either remain unchanged or will decline (at least, upper margin of UAH1,600 per MT prices range is quite possible to slightly low down).
It is to be admitted, granulated bran export prices (Turkey/Georgia) have somewhat lowered due RF/Kazakhstan having grown offer on world market.
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