According to the updated FAO forecast, global cereal production in 2021 will amount to 2.793 billion tons, which is 0.8% more than the previous year. Wheat production volumes in 2021 will be comparable to 2020 figures, while the production of coarse grains will be 1.3%, and rice 0.7% higher than the previous year.

• The January survey of winter cereal crop emergence after the snow cover melted in the fields showed that the plants were green with minor damage to the leaf apparatus. In most of the territory, the general condition of the crops, according to the NAAN of Ukraine, was characterized mainly as good and satisfactory;
• According to the State Customs Service as of February 4, 39.1 million tons of grain and leguminous crops have been exported from Ukraine since the beginning of the 2021/22 MY, which is 9.8 million tons more than on the corresponding date last season. Wheat supplies amounted to 17.2 million tons (+4.1 million tons), barley – 5.5 million tons (+1.5 million tons), rye – 156.8 thousand tons  (+155.1 thousand tons), corn – 16 million tons (+4.2 million tons). In addition, 63.9 thousand tons of cereal flour (including 62.8 thousand tons of wheat flour) were supplied abroad, which is 23.9 thousand tons less than the corresponding figure for the previous season;
• Ukraine and Turkey concluded a Free Trade Area (FTA) agreement, a key provision of which for Ukraine is the establishment of a duty-free regime for 10,337 product items. In particular, Turkey will open improved access for Ukraine’s agricultural products – the duty on cereal supplies will be 0%;
• According to the Russian Ministry of Agriculture (RF MinSelkhoz), the duty on Russian wheat export supplies will decrease from the previous 93.9 to 93.2 $/ton starting February 9, and the duty on barley supplies will decrease from 74.6 to 73.3 $/ton. However, the export duty on corn supplies will increase from 49.6 to 52.7 $/ton. The established duties will be valid until February 15, 2022;
• The area sown with wheat in Russia this year will amount to 29.5 million hectares, which is 0.8 million hectares more than in 2021. Corn areas will increase by 34 thousand hectares, up to 3 million hectares, barley areas will remain at last year’s level – 8.2 million hectares, and rye areas will decrease by 126.8 thousand hectares, down to 917.6 thousand hectares, according to the presentation by the Russian Ministry of Agriculture (RF MinSelkhoz);
• The USDA agricultural attaché in Turkey lowered its forecast for wheat imports to the country in the 2021/22 MY by 5 million compared to the previously published figure – to 10.8 million tons, which is also lower than the USDA’s January forecast (11 million tons). This was a result of the decline in the lira exchange rate, as well as the expected increase in barley imports, Reuters reports;
• Tunisia’s state food procurement agency ODC purchased, as planned, 75 thousand tons of durum wheat at a price of $643-649/ton C&F, 100 thousand tons of soft wheat at a price of $348.69-350.77/ton C&F, and 75 thousand tons of barley at a price of $332.69-342/ton C&F during a tender held on February 2. The grain supplies to the importer are expected in February-April this year;
• The Turkish Grain Board (TMO) announced an international tender for the purchase of 13 lots of 25 thousand tons, totaling 325 thousand tons of feed corn of optional origin, to be held on February 8. Delivery is scheduled for February 25-March 15 this year;
• The State Food Procurement Agency of Bangladesh announced a tender on February 14 for the purchase of 50 thousand tons of milling wheat of optional origin, with delivery within 40 days from the date of contract signing.

According to FAO experts, global cereal consumption is expected to increase by 1.6% in the 2021/22 season compared to the previous season, which may result in the stock-to-use ratio falling to 28.7%, slightly higher than a year earlier, but still comparable to previous periods. FAO analysts forecast global grain trade in the  2021/22 MY at a record level of 481 million tons, which is 0.4% higher than the previous year. Specifically, the volume of global wheat trade may increase by 2%, and rice by almost 4%, which more than compensates for the expected 1.5% decrease in the supply of coarse grains to world markets.

Last week, wheat prices on the Ukrainian domestic market fell sharply due to the weakening of export demand for the grain. The decline in the corn market was more moderate, and barley virtually maintained its previous positions.

According to monitoring data from ProAgro Group, wheat prices of all classes at primary elevators fell by an average of 350 UAH/ton during the week, while the decline in ports was even steeper, amounting to 400-450 UAH/ton. This occurred against the backdrop of a sharp drop in the export price of the grain to a three-month minimum: wheat with 12.5% protein content for delivery in February-March on FOB/Black Sea ports fell by an average of $16/ton to $310-315/ton over the past week, and feed wheat lost about $10/ton in price. Wheat prices fell throughout the entire Black Sea region, driven by several factors: reduced demand from importers, who had largely purchased the necessary volumes of grain for the near future, decreased fears regarding a Russian attack on Ukraine, and the good condition of winter crops in the region.

Corn also became cheaper last week: its price at domestic elevators and ports decreased by an average of 50 UAH/ton, while the nearest FOB grain contracts lost about $1/ton. The price reduction could have been more noticeable, but the growing global trend for soybeans provides support to grain prices.

Barley on EXW basis became cheaper last week by an average of 50 UAH/ton, but maintained the previous price in ports, while in the export direction, contracts for the grain rose in price by an average of $5/ton. However, due to the reduction in domestic grain supply, trade in it is rapidly contracting. 

On average, food and feed wheat decreased in price by 200 UAH/ton last week, including at processors’ bases. Meanwhile, prices for corn and barley remained at the previous level. The offer prices from producers for wheat processing products – premium and first-grade flour and bran – were also stable.