Black sea region wheat update: Ukraine and Russia wheat prices climb as supply tightens

Black Sea wheat prices have surged in recent weeks due to tight supply and rising domestic demand, but market dynamics and harvest progress hint at a potential shift in the weeks ahead, with initial signs of that already seen.

The Black Sea wheat prices were up by at least $14.50 per tonne in the last two weeks, pushed by the short coverage on the background of increasing domestic prices and slow farmer selling, trade sources told Fastmarkets.  But on July 23-24, the increase stopped, and the offers started to drop.

The first signs of the upcoming increase were seen in early July, as the first results from the fields in both Ukraine and Russia were coming, and quality appeared to be questionable. 

Ukraine typically has approximately half of its wheat production classified as feed wheat, and feed wheat offers disappeared from the market from July 9, which was one of the first signs of the coming shortcovering.

Fastmarket’s assessment for September shipment feed wheat moved up by $19 per tonne to the current $232 per tonne for September loading by July 24.

But as the market started to drop after July 25, with a lack of offers seen, the price reduced at the same speed as it increased, as on Friday Fastmarkets lowered the feed wheat assessment by $3 per tonne to $229 per tonne. On July 28, offers were already seen at $226 per tonne FOB Pivdenniy-Odesa-Chornomorsk (POC) for September loading.

Traders expect there to be more feed wheat in the future  

Traders still expect that there will be more feed wheat available in the market later when harvest progresses into the western regions where harvest has just started, but for now, there are still a lack of offers.

In Ukraine, trade sources also noted that there’s additional high protein wheat being offered from the country now, which is uncommon. Even a few weeks earlier, there was concern that other than high protein, the other quality specifications were bad. But it appears that the quality is good in general. 

Still, the prices for milling wheat were also increasing in the past two weeks, along with feed wheat, with 11.5% added $15.50 per tonne to $237.50 per tonne FOB POC by July 24, but same as feed on July 25 the market faced the shift, dropping by $5.50 per tone to $232 per tonne.

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