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Ukraine wheat prices tumble as tensions intensify; exports firm

Highlights

Russia recognizes Ukraine's breakaway regions

2021-22 wheat exports at 17.8 mil mt, up 34% on year

Export prices shed over 4% on month, likely more volatility

  • Author
  • Sampad Nandy
  • Editor
  • Norazlina Jumaat
  • Commodity
  • Agriculture
  • Tags
  • United States
  • Topic
  • War in Ukraine

The pace of Ukraine's wheat exports remained steady during the past week ended Feb. 21, but export prices of the grain took a tumble amid escalating tensions with Russia.

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S&P Global Platts had assessed Ukraine wheat FOB at $306/mt Feb. 21, over 4% lower from $320/mt on Jan. 21, due to the ongoing tensions in the Black Sea region.

Russia recognized Ukraine's breakaway states, Donetsk and Luhansk, on Feb. 21 and ordered to deploy Russian troops on a "peacekeeping mission" into these regions.

Ukraine exported over 300,000 mt of wheat during the week to Feb. 21, taking overall shipments to 17.8 million mt so far in marketing year 2021-22 (July-June), according to data released by its agriculture ministry on Feb. 21. Wheat exports through Feb. 21 were up 34% on the year.

Ukraine shipped out 16.6 million mt of wheat in MY 2020-21.

S&P Global Platts Analytics has projected Ukraine to export 22.5 million mt of wheat in MY 2021-22, while the US Department of Agriculture forecast the country's wheat exports at 24.2 million mt in its World Agricultural Supply and Demand Estimates report released Feb. 9.

Ukraine's wheat exports have been strong this marketing year due to globally tight supplies.

However, ongoing tensions with Russia is likely to put pressure on its export campaign, a trader said.

Ukraine harvested around 33 million mt of wheat in MY 2021-22, up from 25.4 million mt in MY 2020-21, according to the ministry.

Platts Analytics projected Ukraine's wheat production at 31.2 million mt for MY 2021-22, while the USDA has pegged Ukraine's wheat output for the year at 33 million mt.

Prices drop amid tensions

Despite the steady pace of shipments, Ukraine's wheat export prices have declined sharply in February and shed $14/mt from January due to continuing uncertainty in the region.

The move to recognize the breakaway territories has led to uncertainties and impacted trade prospects of Black Sea wheat.

Platts assessed FOB prices of 11.5% protein wheat from Ukraine at $306/mt Feb. 21, down $4/mt on the day.

"Demand for Ukrainian wheat is likely to be hit in the near term as the uncertainties are expected to hit shipments," a Kyiv-based trader said.

The tensions in the region may also bring some volatility in export prices in the coming weeks.

With the ongoing Russia-Ukraine tensions seen impacting wheat shipments from the Black Sea region, demand for Australian and Argentinian wheat is likely to increase.