Wheat: High quality crop and competitive prices diminish reserves on a weekly basis

October 5, 2017 at 9:11 AM , Starry Night Ltd.
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SOFIA. Prices have been following a downward trend since the start of the marketing season. Favorable conditions for sowing.

BULGARIA. Recent rains have been quite auspicious for planting the crop. Currently, farmers are busily sowing fields for the next season.

Wheat: An inverse relationship between prices and exports

Even though the overall quality characteristics of this year’s wheat are higher than those of last year, competitive prices within the Black sea region are what drive market sentiments. According to the Ministry of Agriculture, since the beginning of the marketing season, average purchasing monthly prices of milling wheat slipped from 0.142 EXW/kg EXW Bulgaria to about 0.136 EUR/kg EXW Bulgaria in the end of September 2017. However, export activity is growing weekly. The inverse relationship between prices and exports is easily established.

Harvest 2017-18

(01.07.2017 - 29.09.2017)

Carry over

   179,000 mt

Domestic output

5,761,626 mt

Domestic consumption

   379,600 mt

Exports to the world

1,937,407 mt

Source: Bulgarian Ministry of Agriculture

By the end of last month, exports to the world accounted to 1,937,407 mt while one year earlier, shipped volumes to foreign markets reached 1,561,448 mt, according to the Ministry of Agriculture. The majority of exported volumes go to EU markets, such as Spain, Italy, Greece among others. So far in the marketing season, 89.62% went to EU countries while the remaining quantities were shipped to the rest of the world.

In the realm of prices

On a year-to-year basis, today’s average purchasing monthly prices are by a few euro higher. Yet, a significant price growth within the realm of the export markets is not foreseen in the short-term. Exporters have always been attuned to competitive prices within the Black sea basin and this year’s excess supply of wheat is already taking its toll on local prices.

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