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Wheat: high quality crop vs. low price

July 31, 2017 at 8:41 AM , Starry Night Ltd.
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Although this year aggregate output will be lower than last year’s, overall farmers have harvested a higher quality crop. Yet, prices remain subdued.

Wheat: high quality vs. low price

SOFIA. Overall, harvest 2017-18 is characterized by a high quality wheat. The higher quality of the crop -- premium grade milling wheat -- inevitably should lead to a higher bidding price. Yet, although farmers ask for a higher price, the market differentiates between milling wheat and feed wheat on average by just about 5 EUR/mt. Such a small difference perplexes farmers, and some of them withdraw their positions from the market, in the hope to realize higher gains if they release the crop later.

In the realm of exports

According to the Ministry of Agriculture, since the beginning of the marketing season till the 23th of July 2017, exports of wheat, via Varna seaport, stood at 60,190 mt; the figure is by 63.5% lower on a yearly basis. The reason is the belated start of harvest and the unusually prolonged harvesting period because of rains and hailstorms. Usually, the exports of wheat via the seaport account for about 50% of total exports of the country. By that time, no exports of wheat have been registered via Burgas seaport. Total exports of the country, via sea and land routes, by week 29 reached 183,800 mt.

Regional developments

In a recent USDA grain report The EU Increases Grain Quotas for Ukraine, the quotas for wheat increased from 950,000 mt to 1,015,000 mt. Prices in the Black sea basin have always exerted influence on local grain prices, and as a result, local market players react accordingly. Ships have been lined up in Varna seaport, so exports will be rising.

Wheat, Bulgaria

Type

EUR/kg

milling wheat

0.148

feed wheat

0.143

EXW Bulgaria

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