Ukraine wheat rises $4 in July, traders eye currency rate

Ukrainian milling wheat rose $3-4 per tonne FOB Black Sea in July as export demand jumped, but a substantial strengthening in the hryvnia currency may lead to a drop in grain supply to the market, traders said on Wednesday.

Ukraine, which is among the world's leading grain exporters, had harvested 22.8 million tonnes of wheat from 83% of its sowing area as of July 30, agriculture ministry data showed.

"We see a significant increase in demand for Ukrainian wheat. A decline in wheat selling by Russian farmers combined with demand from our traditional consumers, and this led to price increase," a trader selling outside Ukraine said.

He said third-class milling wheat FOB Black Sea for August delivery cost $188 per tonne at the end of July compared with $184 early in the month.

"Our wheat has been the perfect quality this year, maybe better than Russian, and buyers may prefer our grain. A delay in supplies from Russian grain producers is an additional factor," another trader said.

Analysts and traders said this week the share of milling wheat in Ukraine's 2019 wheat harvest was likely to rise to as much as 70% from around 55% in 2018 thanks to hot and dry weather.

While the agriculture ministry gives no 2019 wheat crop forecast, analysts see output up 22% to 30 million tonnes.

The ministry has said Ukraine exported 650,000 tonnes of wheat so far in the 2019/20 season, which runs from July to June, almost the same volume as the country exported in the same period a season earlier.

Traders see no grounds for a decrease in dollar-denominated prices in the near future.

But they said a strengthening in Ukraine's hryvnia currency may affect trade because farmers could cut wheat supplies to the market awaiting a more favourable exchange rate.

The hryvnia strengthened 5.3% in July to 25.08 to the dollar.

Reuters