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Our team of price reporters brings you the top stories and market movements making headlines in the wheat market this week.
The Ukrainian Grain Association has appealed to the country’s agriculture and economy ministries to end a license system introduced after the Russian invasion in late February that has effectively stopped wheat exports from the country, arguing that Ukraine has ample stocks of wheat to meet its needs.
In a statement Tuesday 5 April, the association said Ukraine had “surplus transitional stocks from last year’s harvest and grain exports are hampered by blocking Ukrainian seaports,” UGA said.
“Revoking the export license will simplify the mechanism of wheat exports and free up storage capacity for the new crop.”
In an official decree dated March 5, the Ukrainian government banned the export of basic products, including sunflower oil and barley, and restricted grain exports after the invasion began February 24, 2022.
The export of wheat was limited by government-issued licenses, which trade sources said were difficult to obtain and therefore made wheat exports almost impossible.
Both Ukraine and Russia are major suppliers of wheat to global market, and the restriction in supplies from the region have led to concerns about food security particularly in African and Middle Eastern nations.
However, while the trade has found imaginative ways to move grains to potential export markets, there remain significant obstacles to bulk exports with all Ukrainian deep water ports effectively shut down.
Brazil’s wheat production and exports are expected to hit a record high volume amid lower supply availability in the international market intensified by the conflict in Ukraine, stimulating the country’s wheat producers to invest in the crop also due to the current increase in prices, both in domestic and foreign markets.
The country’s planted area is expected to reach 3.4 million hectares, 20.6% up from the previous year, while production is forecast at 10 million tonnes, consultancy StoneX said on Thursday 7 April.
In early April, the country’s food agency Conab forecast a 7.9 million tonnes production estimate, up from last year’s 7.6 million tonnes, while the planted area was forecast at 2.7 million tonnes.
Exports are expected at 3.5 million tonnes, also a record.
In the first quarter of the year, Brazil’s exports reached 2.1 million tonnes, versus 490,658 tonnes in the same period in 2021, Brazil’s grain exporters’ association Anec showed on Tuesday.
“It is important to highlight that in face of a favorable exchange rate and competitive prices, Brazil has become a potential exporter of wheat, something new for the country,” said StoneX’s risk management consultant, Jonathan Pinheiro.
Wheat exports from India to Indonesia have been suspended temporarily after essential food safety test laboratory licenses have lapsed, trade sources have told Fastmarkets Agricensus Friday 8 April.
The expiration of the licenses is likely to dent a recent export surge for Indian wheat, just weeks after the country’s prime minister urged traders to seize the opportunity that fighting in the Black Sea has lent to alternative wheat exporters.
However, Indonesia had paused imports of wheat coming from India after the licenses for food safety testing laboratories in India failed to be renewed on time, resulting in the labs losing their accreditation status.
The suspension includes not only wheat, but other agricultural products – although no exhaustive list was available.
According to reports from local news outlets in India, government officials from both India and Indonesia have been in discussion since the suspension was imposed to resolve the issue, with one official expressing hope that shipments will be allowed to resume in the coming days.
However, trade sources also told Fastmarkets Agricensus that the situation could take up to 30 days to resolve.
As such, some buyers have also put their buying on hold, preferring to wait to commit to further purchases until a clearer timeline is established.
“I bought some volume for April-June… but now I’ve stopped [due to this issue]. The seller said it will be resolved in 30 days, but who knows so I don’t want to take more exposure from India until things are clearer,” an Indonesia-based buyer told Fastmarkets Agricensus.
Indian wheat has been sought after by importing countries, especially in Asia in recent weeks as an alternative option after wheat supply from the Black Sea region was cut off due to the ongoing Russia-Ukraine conflict.
Indian wheat has also priced more competitively against Australian wheat prices, with the latest offers for August feed wheat heard at $330 per tonne FOB India for Indian 11.5% against $357 per tonne FOB East Coast Australia for feed wheat.
For the time being, buyers note that the suspension is unlikely to cause significant disruption to Indonesia’s wheat supply.
However, the issue could pose further challenges if shipments do not resume in two months.
Keep up to date with the wheat prices and trends shaping the agricultural landscape, visit our dedicated wheat market insights page.