Ukrainian Exports of Agricultural Grain (Wheat) Down in the Doldrums: Why?

The European Authority has announced restrictions on the imports of Ukrainian agricultural products, which include Wheat, Maize, Rapeseed, and Sunflower seed, as Ukraine is considered one of the world's largest exporters of grains and oilseeds. Geopolitical tension between Russian-Ukraine affected the overall grains trading, which feeds billions of people daily. Furthermore, as per the current year's trend, Ukraine's harvest might plummet by as much as 50% compared to the previous year and before the war. This altogether has kept the market trend for Wheat in the downward direction.

Eastern European farmers were initially aided economically by the crisis in Ukraine as crop prices dramatically increased in accordance with the world grain markets. However, Ukrainian grains and oilseeds have become more competitive across the local markets. Since many of the trucks and rail wagons that the farmers would ordinarily use are now being managed to convey goods from Ukraine, the farmers have also discovered that transporting their products is challenging and expensive. Moreover, a significant price decrease has heightened their worries recently, which has affected the imports from Ukraine. However, traders attribute the price drops for various agricultural products such as Wheat, a global trend, to things like robust shipments from Brazil and Russia and weaker-than-expected demand from China.

Currently, owing to the Russian invasion of Ukraine has resulted in a lack of access to finance, lack of access to fertilizers, fuel, and labor, but also the price of grain in Ukraine is low. So, the incentive for the farmers to plant it is lower, which has resulted in weakened manufacturing activities. Furthermore, the European region saw smaller acreages or areas allocated to these crops in Ukraine, implying that the impact will most likely be seen this year, from a supply and demand fundamentals than the previous year..

Bedside this, throughout April, in APAC region also saw persistent weakness in the demand for Wheat and poor operating rates for Wheat businesses. The domestic Wheat market was rather pessimistic overall. The price of Wheat in the domestic market was falling in a poor manner under the weight of several negative news stories. The aborted auction of policy Wheat was increasing, and trade topics remained pessimistic on the futures market.