After a significant decrease in global wheat and corn prices in the middle of the current month, when the publication of the January USDA forecast caused bearish trends in the grain markets, prices for major crops began to recover last week and by the second half of the week reached higher values than those from which they dropped previously.

• According to the State Customs Service, as of January 21, 36.1 million tons of grain and leguminous crops have been exported from Ukraine since the beginning of the 2021/22 MY, which is 7.8 million tons more than on the corresponding date last season. Wheat supplies amounted to 16.6 million tons (+3.7 million tons), barley – 5.4 million tons (+1.5 million tons), rye – 148.9 thousand tons (+147.2 thousand tons), corn – 13.7 million tons (+2.7 million tons). In addition, 62.1 thousand tons of grain flour (including 61.1 thousand tons of wheat flour) were supplied abroad, which is 20.7 thousand tons less than the corresponding figure for the previous season;
• According to the Ministry of Agrarian Policy, Ukraine has already exported 10.8 million tons of food wheat in the 2021/22 MY out of an export potential of 13.4 million tons. Deputy Minister Taras Vysotsky advised traders to switch to exporting feed grain, of which only 5.3 million tons or 45% have been shipped, in order not to fuel the rise in domestic wheat prices;
• In Ukraine, the validity of 11 GOST standards in the field of grain and grain products was canceled starting January 1, 2022. According to the European Business Association, market participants are seriously concerned about the lack of alternative regulatory documents defining methods for determining and controlling the quality of grain raw materials and products of its processing.
• According to the Ministry of Agriculture of the Russian Federation, the duty on Russian wheat export supplies will decrease from the previous $97.5 to $95.8/tonne starting January 26, and the duty on barley supplies will decrease from $79 to $74.4/tonne. However, the duty on corn supplies will increase from $46.1 to $50.6/tonne. The established duty rates will be valid until February 1, 2022, inclusive;
• The Head of the Ministry of Agriculture of Kazakhstan announced the introduction by the government of the Republic of Kazakhstan of a ban on the export of a number of agricultural products and raw materials, including feed grain. The ban will be valid until July 1, 2022, aimed at stabilizing prices for socially significant goods;
• According to the Buenos Aires Grain Exchange, Argentina harvested a record wheat crop in the 2021/22 MY – 21.8 million tonnes with an average yield of 34.4 cwt/ha, which is 28% and 21.9% higher, respectively, than the previous season’s figures. The previous maximum production of grain in the country was recorded in the 2018/19 MY – 19 million tonnes;
• The Turkish state grain council TMO purchased about 335 thousand tonnes (preliminary data) at an international tender on Tuesday, January 18, buying up the entire volume of offers.;
• According to preliminary information, Turkey’s state food procurement agency TMO contracted 345 thousand tonnes of barley at a tender on January 20, at an average price of $322.58/tonne C&F, with delivery scheduled between February 15 and March 10 this year.;
• Algeria’s state food procurement agency OAIC contracted 120 thousand tonnes of barley of optional origin during a tender held on January 18, at a price of $323-324/tonne C&F, with delivery scheduled between February 16 and March 15 this year.

One of the main factors influencing pricing was the escalation of the security situation in the Black Sea region due to the threat of a Russian invasion of Ukraine. Both Russia and Ukraine are leading grain exporters to the global market, and any armed conflict between the countries will lead to disruption of existing supply chains. At the same time, export prices for Russian and Ukrainian wheat itself declined on the spot market last week, as buyers could not be sure of the fulfillment of trade contracts.

Last week, the market for staple grains in Ukraine maintained bullish sentiment, demonstrating upward price trends. Specifically in the wheat market, prices rose despite their decline on an FOB basis. On the one hand, there are certain fears regarding the further development of the confrontation between Ukraine and Russia. On the other hand, the devaluation of the national currency gave grounds for traders to raise their procurement prices within the country while remaining competitive in global markets. I want to emphasize that the existing forward contracts for the supply of Ukrainian, Russian, and Romanian wheat   in June this year are concluded at the same price – an average of $315/ton.

Thus, according to ProAgro Group monitoring data, at primary elevators, wheat prices during the second week of 2022 increased for Class 2 and 3 grain – by an average of 75 UAH/ton, and for feed grain – by 200 UAH per ton of grain.  During the same period, the price increase in Ukrainian ports amounted to 100 and 200 UAH per ton, respectively. It is worth noting that while prices for Ukrainian wheat with 12.5% protein remained stable on the FOB/Black Sea ports basis, the cost of milling grain with 11.5% protein and feed wheat decreased during the same period by 5.5 $/ton and 3.5 $/ton, respectively.

Last week, price growth was again recorded in the corn market. Specifically, prices for corn increased by an average of 300 UAH per ton of grain, both at domestic elevators and in ports. Export contracts for Ukrainian corn (FOB Black Sea) with delivery in February–April of the current year rose by an average of 2.5 $/ton.

The Ukrainian barley market also showed price growth, both on an EXW basis and at port elevators. On primary bases, its price increased by 250 UAH/ton, and in ports – by 300 UAH/ton.

Processing enterprises were also forced to raise their purchase prices last week. On average, they increased by 150 UAH/ton for millers and by 300 UAH/ton for producers of groats and compound feeds.