Although all commodity markets are under pressure from weakening global demand and cheapening crude oil, wheat prices rose appreciably late in the week. Coronavirus-related concerns and restrictive measures taken by national governments in many countries, including Europe and the Black Sea region, pushed consumers to buy some food products as a reserve. In addition, some growth is seen in speculative purchases in preparation for a possible worsening of the situation and export restrictions.
Russia. The rouble’s exchange rate has slumped: its value is down 25% from early March. This caused a rise in grain exports from Russia, which were up 35% month-over-month on March 1-20. In total, 30 MMT has been shipped abroad this season that is still down 10% from a year ago (33.3 MMT), but the gap is narrowing. The government had not imposed any restrictions by March 20, besides 10-day restriction on groats exports (i.e. for the period of March 20-30, 2020). In addition, the Agriculture Ministry ordered the regions to stockpile food reserves for two months.
The imposition of further export restrictions cannot be ruled out if the situation deteriorates, i.e. in case of further rouble devaluation, active purchases in the consumer market, hitting the maximum export limit, or shrinking domestic stocks, UkrAgroConsult reports.
Ukraine exported grains at a rapid pace still before the drop in its national currency. The hryvnia has already lost 15% of its value this month, accelerating exports to an even higher speed. On March 1-20, grain shipments from Ukrainian ports were up 15% year-on-year and up 14% from February 1-20. 43 MMT of grain has already been exported since the beginning of this season against 34.8 MMT in the same period last year.
The government has imposed no restrictions, but drawn up a list of goods whose stocks shall be controlled, including, in particular, wheat flour, sunflower oil and groats. In case of a threat to the nation’s food security, the government may take measures to limit exports.
Consisting predominantly of corn, grain exports pose no substantial threat in this respect; therefore any restrictions are extremely unlikely to be imposed. Noteworthy is that domestic corn demand from the alcohol industry may somewhat increase because of a growing use of alcohol for disinfection purposes.
Romania is experiencing some problems with wheat deliveries to mills. Flour demand from population has strengthened substantially. Domestic wheat prices are on the rise due to competition between processing companies and exporters.
In the port of Constanța, similar to other Black Sea ports, a 14-day quarantine regime was introduced for ships arriving from countries with an increased risk of coronavirus infection. Contacts with crew members of these ships and port officials must be limited as much as possible; health professionals constantly screen the body temperature of crew members.
Annually, Romania purchases roughly 130 KMT of flour from foreign markets, exporting at most 3-10 KMT, but it is delivered largely by overland transport from neighboring EU countries. There is no restrictions on food trade within the EU, but product deliveries are slowed by customs clearance and sanitary control procedures. No restrictions on grain and oilseed exports from Romania have been reported so far.
The Black Sea countries have not yet imposed any strict export restrictions, but are ready to take food security measures at any moment.
More detailed information on the latest trends in grain exports, supply and demand balances with breakdown by crop, price behavior, crop conditions and progress in harvesting/planting in the countries of Black Sea Region is available to subscribers for Online Analytics "Black Sea Grain" in the new innovative tool for agri market participants – AgriSupp by UkrAgroConsult. Subscribe to a 14-da free trial days!!
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