Milling wheat, feed wheat and сorn almost at same prices on Ukrainian physical market — ASAP Agri
ASAP Agri analysts currently observe on the physical market a particular situation when wheat and corn prices are displayed almost at the same level on the CPT POC basis, which is rare enough to be highlighted, they mark.
As for wheat, as of 10 October, the premium applied to milling quality compared to feed is seen at only 5$ when it reached 30$ during the second half of July when echoes from harvest let appear a larger share of feed wheat than expected by the players. This situation is of course supportive for milling wheat prices at the expense of feed wheat.
"In recent days, on CPT as on FOB basis, we have seen corn being traded at higher prices than feed wheat. Compound feed markers and livestock producers have started switching their feed recipes integrating more feed wheat at the expense of corn. This situation isn’t only relevant in Ukraine but is widespread globally," says Olivier Bouillet, head of analytics and insights at ASAP Agri.
For example, Atria brokers received feedback from Turkish buyers that were going in the same direction. But on 10 October, Turkey changed its import policy from 35-40 USD/MT, paid by importers within licences regime to 5% import tax for 1 MMT of corn (equivalent to about 12 USD/MT).
This is expected to spur buyers’ interest for spot deliveries. Is this situation to be considered by USDA in its next monthly update to be published on Friday?
"One thing is for sure, the current milling wheat-corn spread isn’t sustainable and will extend soon. The underlying question is then the following: are milling prices going to see a higher level or are corn prices going towards a lower level?"
With current factors the first scenario looks more confident. As all eyes are now on russia, whose wheat export pace is already attracting the interest of authorities and market participants are awaiting for results of 11 October exporters’ meeting.
