Record High Prices in Black Sea Ports
Wheat export purchase prices in the Black Sea ports of Ukraine have reached their highest levels since before the war, hitting
- $215-220 per ton or UAH 9,700-10,000 per ton for food wheat
- $200-203 per ton or UAH 9,100-9,300 per ton for fodder wheat
with delivery to the port. However, this price growth has recently halted.
European Market and Egyptian Tender Influence
The high prices are supported by elevated European wheat prices and the results of a recent tender in Egypt. The General Authority for Supply Commodities (GASC) in Egypt purchased Ukrainian wheat with 12.5% protein content for delivery between July 5-15 at a price of $268.8 per ton FOB Black Sea, equivalent to $245-250 per ton CRT port.
Impact of Recent Weather Conditions
Recent rains have improved the condition of the wheat crop in Ukraine. However, the potential for a high yield has been compromised due to extremely dry weather in May. According to the Ukrhydrometeorological center, May 2024 was one of the driest months in the last 30 years in Ukraine, and in the Cherkasy region, it was the driest in the last 100 years. Drought conditions affected most areas of Kharkiv, Kherson, Zaporizhzhia, southern and central Dnipropetrovsk, and western Poltava regions.
Russian Crop Conditions and Forecasts
As of June 4, 90% of the planned areas were sown with hot crops in the Russian Federation. Favorable rainfalls in spring crop regions allowed an increase in the total area under winter and summer crops by 300,000 hectares to 84.5 million hectares. In the South and North Caucasus, temperatures are expected to reach 30-35°C, accelerating wheat ripening, with harvesting set to begin in a week.
The SovEkon agency has lowered its forecast for the wheat harvest in the Russian Federation from 82.1 to 80.7 million tons, despite a March estimate of 94 million tons.
European Wheat Market Trends
On the Euronext exchange, September wheat futures fell 1.7% yesterday to €254.25 per ton or $277 per ton (-3.5% for the week, +8.2% for the month) due to low export rates and tender results in Algeria.
EU Export and Import Data
According to the European Commission, as of June 2, the EU exported 28.2 million tons of wheat in the 2023/24 marketing year, with France accounting for 8.2 million tons and Romania 6.2 million tons, out of the projected USDA total of 35 million tons. This export figure is 5% lower than last year’s rate. Conversely, wheat imports to the EU increased by 2% compared to the previous season, reaching 8.7 million tons, with Ukraine supplying 6.3 million tons. Spain imported 5.3 million tons, and Italy 1.2 million tons.
Recent Purchases by Algeria and Egypt
The Algerian state agency OAIC purchased 840,000 tons of soft wheat of arbitrary origin for August delivery at an average price of $279 per ton C&F in a tender on June 4. Similarly, Egypt recently bought wheat at $302.2 per ton C&F.
The recent stabilization of wheat prices in Ukraine, following significant increases, highlights the dynamic nature of global agricultural markets. The interplay of local weather conditions, international demand, and competitive tendering processes will continue to shape the market. Stakeholders should remain attentive to these factors to navigate the evolving landscape effectively.