Ukrainian traders export grain at loss?

07.09.2016

Prices do not gladden traders in the new season. World grain production continues to set new records, and pressures prices. CBOT wheat futures fell to a ten-year low affecting the Black Sea export prices. Compared with early September 2015, grain prices lost no less than USD 10/MT. wheat cme

Given that Ukraine exports more than 65% of all produced grain, reduction of world prices would have triggered some decrease in grain cost in the domestic market. But in fact, domestic prices... strengthened.

As a result, we can say that a spread between domestic prices at inland silos and on-board prices declined to a record low, and currently equals only USD 6-10/MT, compared with USD 50-60/MT in 2013.

Moreover, domestic CPT-port prices are even higher than export FOB prices. Does it mean that traders altruistically sell grain at prices lower than domestic and support Ukrainian farmers?

UkrAgroConsult believes that the established phenomenon may be explained by the following facts…

Full version of the article is available to subscribers for weekly market report “Black Sea Grain & Oil” and “Online market review” by UkrAgroConsult.

 

UkrAgroConsult

Readers choice: TOP-5 articles of the month by UkrAgroConsult