By KYIV. May 5 (Interfax-Ukraine) – The new crop of wheat, which is in demand, is almost not contracted on forward contracts due to the restriction of the movement of ships along the grain corridor and problems at the western borders, while the stocks of the old crop “put pressure” on prices, analysts of the Ukrainian Agrarian Council said.
“There is a demand for wheat of the old crop, there are significant reserves of 8 million tonnes, but all exports will now focus on small ports, rail and truck deliveries. In fact, wheat is not sold at the Black Sea ports,” the analytical center of the PUSK cooperative, created within the Ukrainian Agrarian Council, said.
According to its forecasts, wheat exports will fall to 1 million tonnes in May from almost 1.4 million tonnes in April, but the real figure will depend on the functioning of the grain corridor.
“Last week was weak for the export of Ukrainian agricultural products, only 11 ships were sent by the grain corridor. This week, analysts predict that Ukraine will send at least 15 ships. They expect that less than 60 ships may leave the seaports of Ukraine in May,” the council noted.
Analysts indicated that due to logistical problems, traders are not at risk of entering into forward agreements, as they do not understand whether they will be able to ship grain in August.
“Ukraine is out of the market for the new crop, forward contracts are signed weakly, possible agreements with delivery in July-August through small ports, but in small batches, maximum 2,000-3,000 tonnes, and at a low price – $ 170 per tonne. The market is switching to spot,” the analysts stated.
They indicated that prices for food wheat on CPT terms in small ports this week are in the range of $190-195/tonne. By the end of the month, we can expect a decrease in export activity and a drop in price tags to the level of $175-180/tonne. At the end of May, convergence of prices for the old and new wheat crops is predicted.
“As for our CPT wheat market, we are actually cut off from the world. Sales channels are very limited. As already mentioned, there are wheat reserves that will put pressure on prices,” PUSK stated.
