Export sales of Ukrainian wheat are growing, with more than 2 million tons contracted since the beginning of February, which could be a record supply for the season.
According to the analytical cooperative “Start”, created within the framework of the All-Ukrainian Agrarian Council (AAC), 1.4 million tons of wheat have already been sold in March.
“Traders say that Indonesia is very actively involved in purchases of Ukrainian feed wheat. This Asian country has sky-high prices in the domestic market and is interested in importing grain. The demand price from Indonesia is $260-265/ton CIF,” the analysts said, adding that it is very profitable to export Ukrainian wheat to Indonesia.
According to them, the “fly in the ointment” in these plans is the conflict in the Red Sea, where there is a high risk of shelling of the merchant fleet. This is still a systemic problem that negatively affects trade in the Black and Mediterranean Seas. The risk is holding back Ukrainian traders from fixing their positions in this direction.
“There are expectations in the market that in the second half of March the passage of ships through the Red Sea may stop completely. A logistical solution would be to detour ships by sea through Africa, but this will raise the cost of freight by $10-12 per ton,” Pusk said.
In addition, experts noted that Ukrainian wheat continues to be the cheapest on most international markets.
Last week, Ukraine sold wheat with a protein content of 12.5% to Egypt for $224 per tonne with delivery to the country. For comparison, Russian wheat cost $245 on an FOB basis. Ukrainian wheat is very cheap compared to other grains in the EU, Egypt and Turkey. The trade tries to keep prices low to make it worthwhile to trade on many bases. Price gaps are large, which keeps the CPT market at low levels. Nevertheless, more and more sellers are coming forward on FOB basis for wheat, with many farmers willing to sell at $195 per tonne in the Danube ports. At the same time, on CPT terms, wheat costs $175-188 per ton, and by the end of the week, the price tags may lose another $2 per ton, according to the analytical department of Pusk.
