Worst case scenario, its “Hurricane Famine » Feared by the UN, avoided but the prices are too high. Wheat prices on the European market rose to almost 440 euros a tonne in mid-May – double last summer – while commercial traffic on the Black Sea was almost at a standstill. But they fell to around 330 euros in August.
A relaxation “started in late May-early June”
“Markets have learned to live with the crisis. The easing started in late May-early June with the first promising production estimates in Europe and the resumption of exports from Ukraine,” explains Agritel’s analyst Gautier Le Molgat. Ukraine is “on track to export nearly 4 million tons of agricultural products in August,” a U.S. government official announced Tuesday, all routes combined, approaching more than 5 million monthly before the war.
The acceleration was in exports from agricultural powerhouse Ukraine Russia30% of world wheat trade by the end of 2021 is the result of an agreement signed between Kyiv and Moscow on July 22, under the auspices of the UN and Turkey. The agreement envisages opening a sea route for 20 million tonnes of corn, wheat and sunflower stored in Ukraine. According to the Joint Coordination Center, which oversees the corridor, 721,449 tonnes have already left the country by sea.
For now, the easing benefits Ukraine more than Russia, which is gearing up for a strong comeback in markets thanks to an exceptional wheat harvest estimated at 88 million tonnes. The Exports Russian wheat sales for July and August fell 27% year-on-year, according to estimates from Russian consulting firm SovEcon.
Russian wheat is still expensive and faces stiff competition. Andrey Sysov, Managing Director of SovEcon. Weak Russian exports were a key factor behind higher prices, he believes, in a crisis where availability was less than prices and logistics.
The threat of inflation
On land, the July deal should encourage an overall recovery in the Black Sea, along with a drop in insurance premiums, which was a brake factor for charterers. Prices are still very high. The reasons for the post-Covid outbreak are actually still there: energy, fertilizer (the price of which has tripled in a year) and transport costs. Added to this is the “Sword of Damocles”. Inflation says broker Edward de Saint-Denis of Plantureux & Associés.
If analysts see the price of wheat continuing to fall in the medium term, they are paying more attention to corn: the drought that is raging everywhere is worrying. The European Union underestimated its corn production by 16%, while the United States revised its yields in certain regions, notably Nebraska and South Dakota (-21.7%).
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