Головна Analytics Grain and processed products market (20.12.21 – 24.12.21)

Grain and processed products market (20.12.21 – 24.12.21)

Last week, the European Commission raised its estimate of soft wheat production in the EU this season from 130.4 to 130.6 million tons. The forecast update could contribute to a further reduction in wheat prices, which both on the European and American markets lasted for about a month amid expectations of a rich harvest in the southern hemisphere – Australia and Argentina.

  • Thanks to the warm weather in December, slow growth processes of winter crops continued on many fields in the southern and central regions of Ukraine until the end of the second decade of December;
  • As of December 1, grain reserves in Ukraine amounted to 33.4 million tons, which is also almost 10.3 million tons more than on the same date in 2020, the State Statistics Service reported. In particular, there are 10.1 million tons of wheat, 1.7 million tons of barley, 255.5 thousand tons of rye, as well as 20.6 million tons of corn. Most of the grain – 20.7 million tons – is stored at the producers’ enterprises, while the grain elevators and warehouses of the processors hold 12.7 million tons;
  • According to the State Customs Service, as of December 24, 30.7 million tons of grain and leguminous crops were exported from Ukraine since the beginning of 2021/22 MY, which is 5.7 million more than on the same date last season. Wheat supplies amounted to 15.63 million tons (+3.3 million), barley – 5.2 million tons (+1.5 million), rye – 87.8 thousand tons (+86.1 thousand), corn – 9.6 million tons (+1 million). In addition, 58.1 thousand tons of grain flour (including 57.3 thousand tons of wheat flour) were exported abroad, which is 18.3 thousand less than the corresponding figure for the previous season;
  • Ukraine will consider the issue of limiting the export of milling wheat in the first half of 2022, Reuters reported. In addition, by the end of the season, 6 million tons of feed wheat and 4 million tons of milling wheat may be supplied;
  • According to the Ministry of Agriculture of the Russian Federation, duties on export supplies of Russian wheat from December 29 will increase from the previous $94 to 94.9 $/ton, corn – from $55 to 69 $/ton, while on barley will decrease from $84.8 to 83.5 $/ton, The established duties will be valid for two weeks – until January 11, 2022;
  • Abares has raised its forecast for the wheat crop in Australia in 2021/22 MY to 34.4 million tons due to an increase in production in the western regions of the country;
  • Grain Exchange of Buenos Aires has raised the forecast of wheat production in Argentina in 2021/22 MY by 500 thousand tons to 21.5 million tons due to higher yields;
  • According to preliminary information from market operators, the Turkish state food procurement agency TMO, during a tender held on December 21, purchased 320 thousand tons of wheat at an average price of 359.13 $/ton C&F with supply during February 2022;
  • On December 29, the Ministry of Industry and Trade of Jordan will hold a tender for the purchase of 120 thousand tons of milling wheat of arbitrary origin. The wheat supply is scheduled from June 16 to August 15, 2022. At a preliminary tender, Jordan purchased 60,000 tons of wheat.

Last week, the situation on the domestic market of major cereals was mixed. After the previous rapid decline, prices this time mostly remained stable, and for corn even slightly recovered under the influence of both export demand and a number of other factors.

According to the monitoring data of ProAgro Group, on the basis of primary elevators, wheat prices have consolidated, but their average value has remained at the same level. Nevertheless, food prices in ports fell by another 50 UAH/ton amid reduced demand ahead of the long New Year holidays. Also, the supply prices of Ukrainian wheat at FOB/Black Sea ports over the past week decreased by 1-2 $/ton.

The domestic market has not yet reacted to the notification about a possible limitation of the volume of wheat exports, in particular flour-grinding quality, in the second half of the season. Traders themselves predict an increase in supply from producers at the end of January and in February, but at higher prices, since the owners, who had previously held back wheat sales, were counting on price growth.

As for corn, last week its prices at domestic elevators increased by an average of 100 UAH/ton, in ports – by 50 UAH/ton, which is explained by the corresponding increase in the FOB supply price, where it added 2 $/ton. Export prices are supported by strong demand from China, which so far outweighs the downward pressure from a large supply of corn and difficulties in getting it from domestic grain elevators to ports.

Barley, which is gradually leaving the trade turnover, has not changed its price either at elevators or in ports. At the same time, with corn, it has risen in price in purchases from processors, who, given the competition with exporters, are trying to maintain supply volumes.


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