The average value of the FAO Food Price Index for cereals in 2021 was 131.2 points, exceeding the previous year’s figure by 28 points (+27.2%) and representing the highest annual average since 2012. Average prices for corn and wheat last year were 44.1% and 31.3% higher, respectively, than the average prices of 2020, mainly due to strong demand and limited supply, especially from major wheat exporters, according to the FAO’s January report published at the end of last week.

• In the last ten days of December 2021, complex weather conditions prevailed in Ukraine, associated with a sharp cold snap and subsequent significant temperature fluctuations. On the coldest days, the average daily temperature was 5-10°C below normal. At the same time, by the end of the ten-day period, a snow cover of varying height had established across the country. Winter crops remained in a state of winter dormancy, according to the Ukrainian Hydrometeorological Center (Ukrhydromettsentr);
• According to the State Customs Service, as of January 6, 33.2 million tons of grains and pulses have been exported from Ukraine since the beginning of the 2021/22 MY, which is 6.8 million tons more than on the corresponding date last season. Wheat supplies amounted to 16.1 million tons (+3.6 million tons), barley – 5.2 million tons (+1.4 million tons), rye – 121.5 thousand tons (+119.8 thousand tons), corn – 11.3 million tons (+1.8 million tons). In addition, 59.6 thousand tons of grain flour (including 58.7 thousand tons of wheat flour) were supplied abroad, which is 19.7 thousand tons less than the corresponding figure for the previous season;
• According to USDA monitoring data, the condition of winter wheat crops in the US worsened over the past month due to a lack of sufficient precipitation in the main production regions. Specifically, in the state of Kansas, the share of grain crops in good and excellent condition decreased from 62% as of November 28, 2021, to 33% by January 3, 2022;
• The severe drought that has established itself across most of Argentina since mid-December threatens the corn harvest, the crops of which have entered the active development phase. According to Reuters, the Buenos Aires Grain Exchange forecasts the country’s gross corn harvest at 57 million tonnes;
• In 2021, Egyptian GASC purchased 5.14 million tonnes of wheat across 21 tenders, including 2.22 million tonnes (43% of the total volume) of Romanian origin, 1.43 million tonnes (28%) of Russian origin, 1.19 million tonnes (23%) of Ukrainian origin, and another 300 thousand tonnes (6%) of French origin. Grain purchase prices at the tenders ranged between $231.88 and $353.5/tonne FOB;
• Turkey extended the zero import duty on wheat (including durum), barley, corn, oats, rye, chickpeas, lentils, and sorghum until the end of 2022. Zero duties on these crops were established in September and were supposed to be valid until December 31, 2021, with the aim of stabilizing the price situation on the domestic market;
• According to market operators, Jordan purchased 60 thousand tonnes of 2022 harvest wheat of optional origin during a tender held on January 5, at a price of $326 per tonne C&F, with delivery in the first half of August this year;
• Tunisia’s state food procurement agency ODC contracted 125 thousand tons of soft wheat, 75 thousand tons of durum wheat, and 75 thousand tons of barley during the tender held on January 5. The supply of grains to the importer is expected to take place in January-March of the current year.

During the first week of 2022, the rise in wheat and corn prices continued in the main exchange markets, which reacted to the worsening weather conditions in their production regions in the USA and Argentina. At the same time, on the spot market, as usual, grain price dynamics were multidirectional and reflected the conjuncture  of specific regional markets.

While the price situation in the domestic market for major grains remained predictably stable during the last week of the past year, 2021, already after the New Year celebrations ended, starting from the second half of last week, despite low activity from both buyers and sellers, wheat and corn prices rose influenced by foreign trade factors. Meanwhile, Ukrainian barley began to decline in price along with the drop in prices for European grain.

Thus, according to the monitoring data of “ProAgro Group”, based on primary elevators, wheat prices in certain regions increased by as much as 200 UAH/ton during the first week of 2022, but their average EXW value increased only by 50 UAH/ton for milling grain and 100 UAH/ton for feed grain. At the same time, the price increase in ports amounted to 100 UAH/ton across all classes. Meanwhile, on an FOB Black Sea ports basis, the price of 12.5% protein wheat increased by an average of 1 $/ton since the second half of last week, while feed grain, conversely, lost $2 per ton of grain.

As for corn, its prices on domestic elevators increased by an average of 100 UAH/ton last week, while in ports, the increase was 250 UAH/ton. This is explained by logistical problems with delivering the grain to sea export bases. Furthermore, the grain offer on FOB added 3 $/ton in price. Export prices are supported by the prolonged drought in Argentina, which worsens the prospect of the future harvest of South American corn, whose supply will be dominant in the global market during the second half of the corn season.

Barley sharply dropped in price at elevators last week—by an average of 200 UAH/ton immediately. This is due to the lack of supply of large commercial batches and decreased demand. However, prices for the grain in ports remained unchanged, despite barley becoming cheaper in the export direction since the end of last year by an average of 6 $/ton.

Wheat and corn prices rose last week, including on the basis of domestic processors, by UAH 50 and UAH 250/tonne respectively, while the selling prices for wheat processing products – flour and bran – remained unchanged.