The Black sea region & European Union is witnessing a steady rise in prices for Wheat since August due to the increase in demand from the global buyers.
The Russian Wheat, FOB Black sea, was seen at $210.75/Mt as in August, rising to $232/Mt by September, while Ukraine Wheat, FOB Black sea, was seen at $206/Mt in August, reaching to $231/Mt in September, according to data from S&P Global.
The reason behind the price rise being less production due to dry weather in the region, followed by high global demand.
The weather delayed planting in many parts of the significant wheat-producing & exporting countries like Ukraine, Russia & The EU.
Reportedly winter wheat planting has started and has been dry in the Black sea; thus, if farmers do not plant at the right time or crops don’t develop before the expected period, the situation hampers the production and later global prices. Also, the higher origin cost is adding the value of Black sea wheat, and farmers may be holding back on wheat stocks in expectation of further price rise.
As far as the forecast for weather in the Black Sea region is concerned, it suggests warmer than usual winters, lower than average rainfall that will impact the germination of the winter wheat crop.
According to USDA, EU & Ukrainian wheat production might be lower by 12% to 7% YoY, respectively, while in Russia, it is expected to be higher by 6%.