Last week’s improvement in weather conditions in the USA, namely precipitation in the main wheat growing areas, improved the condition of winter crops in the country and lowered stock prices for American grain. Meanwhile, in France, wheat stock quotes decreased both due to the overseas factor and because of the Algerian tender, where French grain accounted for only a small fraction of the procurement volume.

• During the first ten days of December, slow vegetation was recorded on winter crops in Ukraine in the southern and, in some places, central regions; active growth processes ceased in the rest of the country. No dangerous phenomena for seedlings were observed;
• According to the State Customs Service, as of December 17, 29.2 million tons of grain and leguminous crops have been exported from Ukraine since the start of the 2021/22 MY, which is 5.3 million tons more than on the corresponding date last season. Wheat supplies amounted to 15.3 million tons (+ 3.1 million tons), barley – 5.1 million tons (+ 1.4 million tons), rye – 86.5 thousand tons (+ 84.8 thousand tons), corn – 8.4 million tons (+ 0.9 million tons). In addition, 57.4 thousand tons of grain flour were supplied abroad (including 56.6 thousand tons of wheat flour), which is 16.8 thousand less than the corresponding figure for the previous season;
• According to the Ministry of Agriculture of the Russian Federation, duties on export supplies of Russian grain will increase from December 22: for wheat – from the previous 91 to 94 $/ton, for barley – from 78.7 to 84.8 $/ton, for corn – from 54.4 to 55 $/ton. The established duties will be valid until December 28 inclusive;
• The RF Government Commission supported the proposal of the Ministry of Agriculture to set a quota for grain exports from Russia in the period February 15 – June 30, 2022, totaling 11 million tons, including 8 million tons of wheat and 3 million tons of rye, barley, and corn. Previously, the quota volume was proposed at 12 million tons;
• The Government of Argentina introduced restrictions on corn and wheat exports in the 2021/22 MY, amounting to 41.6 million tons and 12.5 million tons respectively, in order to prevent shortages and suppress the rise in food prices in the country;
• EU countries exported 13.7 million tons of wheat from the beginning of the 2021/22 MY until December 12, which is 1.2 million tons more than during the corresponding period last season, while grain imports decreased by 0.6 million to 2 million tons. Barley exports during this period amounted to 4.4 million tons, corn – 2.6 million tons, and imports of the specified crops – 410 thousand tons and 5.9 million tons, respectively;
• Coceral experts published the first forecast for the harvest of key cereal crops in the EU and Great Britain countries in 2022. Total production volume is expected to be 304.5 million tons compared to 307.6 million tons harvested in 2021;
• The Algerian state agency OAIC purchased 660 thousand tons of milling wheat in a tender on December 14, with delivery in January – February, at a price of 372-376 $/ton C&F. The main volumes will be supplied from Argentina and Black Sea countries, and only a small batch -from France;
• The Turkish Grain Agency (TMO) announced an international tender on December 21 for the purchase of 320 thousand tons of milling wheat of optional origin, with delivery on February 1-28, 2022.

Downward trends also prevailed in the spot wheat market. In particular, in the Black Sea region, prices fell under the influence of reduced demand, as grain from this region is currently the most expensive, and also considering the practical cessation of purchases by Turkey due to the collapse of the local currency.

Last week, the price decline in the domestic wheat market accelerated, a trend observed since the beginning of the current month. Corn prices also fell again. Barley did not escape the downward trend this time either. Thus, according to monitoring data from ProAgro Group, the average prices of  wheat, both food-grade and feed-grade, at primary elevators and in ports in mid-December decreased by an average of 250 UAH/ton, which is the largest weekly price drop this current season. The decline was caused by reduced demand from importers both due to holidays and due to high grain prices, which reached a maximum in the Black Sea region at the end of November and were quoted higher than American and even European (specifically, French) grain.

It should be noted that the main regional wheat importer – Turkey – practically stopped purchases due to the record devaluation of its national currency, which halved in value against the dollar just last week. However, the offer prices for Ukrainian wheat on FOB/Black Sea ports basis continue to remain quite high, and those for feed grain even increased by an average of $3/ton last week. Against the background of the hryvnia price reduction, producers sharply curtailed the grain supply, but exporters currently also do not need large volumes of procurement. 

Domestic corn prices also decreased last week: on EXW and CPT-port bases, the grain lost an average of 100 UAH per ton. The large number of corn offers from producers caused the price reduction. Ukrainian corn on FOB/deep-sea ports basis cheapened by an average of $2/ton last week.

Although barley maintained its price at elevators, it also cheapened at ports by an average of 100 UAH/ton last week.

Domestic processors also lowered purchase prices for all major grain crops by 50-100 UAH/ton last week.  At the same time, the offer prices for wheat processing products – flour and bran – are currently held at previous levels.