Redirecting wheat exports to Ukraine's western border makes little economic sense, White Brokers says

Ukraine's agricultural export flows are increasingly shifting toward the Danube corridor following Russian attacks on the ports of Big Odesa. Some traders have also attempted to redirect exports by rail through Ukraine's western border, but the route remains economically unviable for wheat, analysts at White Brokers said.

As of Friday, feed wheat prices in Danube ports stood at around $195 per ton DAP, while Grade 3 milling wheat was quoted at approximately $200/t DAP, according to the brokerage.

Russian strikes have further complicated the situation for producers as the harvest campaign is only beginning while substantial carryover stocks from the previous season remain on the market. Without the resumption of operations at Ukraine's deep-water Black Sea ports, pressure on domestic wheat prices is expected to intensify in the coming weeks.

As a result, trading activity in Ukraine's wheat market dropped sharply this week. By the end of the week, purchase bids at deep-water ports had effectively disappeared, with traders almost completely suspending procurement.

"Following strikes on port infrastructure and civilian vessels, the market has entered a period of uncertainty. Many traders are facing difficulties fulfilling contracts because they are unable to ship cargoes, while shipowners have begun refusing to position vessels for loading," White Brokers said.

According to the analysts, the main factors likely to weigh on global wheat prices in the near term include:

• the start of harvest across the Northern Hemisphere;
• intense competition, with low-priced offers from some exporters continuing to pressure prices in international tenders;
• favourable crop prospects across Europe.

At the same time, the following factors could provide support to wheat prices:

• logistics disruptions in the Black Sea and Sea of Azov;
• lower wheat production in the United States;
• inflationary risks;
  geopolitical and logistics concerns, including the conflict in the Middle East, particularly around Iran and the Strait of Hormuz, which is increasing freight costs and supply risks;
• weather conditions in Europe.