Last week, two reports on the state of the global grain market were released one after another. The first – the January report of the US Department of Agriculture (USDA) – had a total downward impact on world wheat and corn prices.

• According to the State Customs Service, as of 12 January, Ukraine has exported since the start of the 2021/22 MY 34 million tons of grain and leguminous crops, which is 6.8 million tons more than on the corresponding date last season. Wheat supplies amounted to 16,2 million tons (+3,5 million tons), barley – 5,3 million tons (+1.4 million tons), rye – 146,8 thousand tons  (+145,1 thousand tons), corn – 12,1 million tons (+1.8 million tons). Additionally,  was supplied abroad60,8 thousand tons of grain flour (including 59,8 thousand tons of wheat flour), which is 20,8 thousand tons less than the corresponding figure for the previous season;
• According to the Ministry of Agriculture of the Russian Federation (Minhozagos RF), the duty on Russian wheat exports will decrease from the previous 98.2 to 95.5 $/ton starting January 19 (for the first time since September last year), on corn supplies – from 67.7 to 46.1 $/ton, and on barley supplies – from 97 to 86.2 $/ton. The established duties will be valid until January 25, 2022;
• The Australian Bureau of Statistics (ABS) reported that in November 2021, the country supplied 659.5 thousand tonnes of feed and malting barley to foreign markets, which is 53% more than the previous month. The main buyers of the grain were the UAE, the Philippines, and Vietnam. The increase in barley supplies from Australia is explained by its competitive price, despite the fact that demand for the grain in the world market remains high with limited supply from other producing countries; CASDE analysts, in their January report, lowered the forecast for corn consumption in China in the 2021/22 MY by 3 million tonnes compared to the previous estimate – down to 287.7 million tonnes, Reuters reported. The consumption forecast for the grain was lowered for both feed purposes and processing needs due to changes in the domestic market conditions;
• Algeria’s state grain agency OAIC purchased 500 to 570 thousand tonnes from Romania, Bulgaria, Ukraine, and Argentina in an international tender on January 14. It is also expected that some volumes of wheat might be supplied from Germany. However, purchases of French grain, which dominated the local market for many years, were not reported. Wheat purchase prices ranged from 348-350 $/tonne C&F, with delivery terms between March 1 to 15 and March 16 to 31, 2022;
• The Iraqi Ministry of Trade contracted 150 thousand tonnes of Australian wheat during a tender held on January 14 at a price of 447 $/tonne C&F;
• Iran’s State Trading Corporation (GTC) purchased about 240 thousand tonnes of milling wheat in a tender on January 12, likely from Russia and/or Germany, at a price of 360-364 euros ($412.96-417.54) per tonne C&F;
• The Algerian state company OAIC will hold a tender on January 18 for the purchase of at least 50 thousand tons of feed barley of optional origin. Delivery of the grain is scheduled for February 16 – March 15, 2022;
• Turkey’s state food procurement agency TMO announced a tender on January 20 for the purchase of 345 thousand tons of barley with delivery scheduled between February 15 and March 10, 2022.

Regarding wheat, USDA increased the forecast for grain production in the 2021/22 season and simultaneously lowered the consumption volume estimate, which, in turn, led to a higher assessment of ending stocks. Concerning corn, the production forecast was also increased thanks to the USA and Ukraine, which offset the expected grain crop losses due to drought in Brazil and Argentina.

At the same time, the International Grains Council lowered its January forecast for overall global grain production by 1 million tons, despite the fact that the reduction in corn production (mainly in South America) was partially offset by IGC analysts increasing the estimate for  wheat harvesting in Australia and Argentina.

The spot market reacted accordingly to the new forecasts and estimates, although regional differences were present.

Last week, the market for major grain crops in Ukraine continued to strengthen, and at a more significant pace than at the beginning of the current year. And while a moderate increase in the export price contributed to the rise in corn prices, domestic prices for wheat and barley rose exclusively due to the limited supply volume from producers, who were still mostly celebrating, and the acceleration of the hryvnia devaluation. The national currency weakened against the US dollar by almost 50 kopiykas on the interbank market during the week, breaking the psychological mark of UAH 28/$ (sale) on Friday, January 14.

Thus, according to ProAgro Group monitoring data, at primary elevator bases, wheat prices during the second week of 2022 increased for Class 2 grain – by an average of UAH 125/ton, Class 3 – by UAH 150/ton, and Class 4 – by UAH 250/ton.  At the same time, the price increase in ports amounted to UAH 150/ton across all classes. However, on the basis of FOB/Black Sea ports, the price for both milling and feed wheat fell by $2/ton during the week, following the world market. Moreover, this drop could have been more significant, but the Black Sea grain received support from the expected limitation of wheat exports  in the second half of the season by Russia and a probable limitation by Ukraine,

Last week, corn significantly increased in price: prices for it rose by an average of UAH 250/ton at domestic elevators, while in ports they rose by UAH 150/ton. The FOB offer price for the grain added a moderate $1/ton.

Barley last week, although remaining at its previous EXW price, also rose by 50 UAH/ton in ports, despite its price being stable in the export direction.

Main grain crops also rose by 100-200 UAH/ton last week on the processors’ basis, who are finishing old stocks and starting to form a raw material base for operation in the coming months.

Also, the offer prices for top and first grade wheat flour from producers added an average of 150 UAH/ton last week, although wheat bran, conversely, fell by 300 UAH/ton.