Global Market Adapts to Reduced Black Sea Wheat Supply

This is reported by UkrAgroConsult experts, who have raised their harvest estimate to 25.6 million tonnes amid a record average yield of around 5 t/ha.

«Long-term production dynamics confirm a recovery in volumes following weaker seasons, while regional performance in the south significantly strengthened the overall result: improved productivity in Odesa and Mykolaiv regions became one of the key factors behind the increase in the country’s average yield,» the experts explained.

The main constraint this season is the logistics system’s ability to physically move the harvest to foreign markets. Export dynamics are already lagging behind the usual seasonal pace, while available supply significantly exceeds the current throughput capacity of export routes. Under its baseline scenario, UkrAgroConsult estimates exports at approximately 12 million tonnes.

The structure of foreign sales is also changing under the influence of logistics. Distant Asian destinations have become more difficult and expensive, so a larger share of actual flows is concentrated in the Mediterranean and other relatively nearby markets. The seasonal export curve remains below the five-year range, while the arrival of large volumes of corn and oilseeds will intensify competition for rail wagons, road transport, Danube capacity and transshipment facilities in the coming months, the experts forecast.

«Global demand is gradually adapting to the reduced presence of Black Sea wheat. Importers are making greater use of supplies from the EU and other regions, while the reaction to each new escalation in the Black Sea is becoming less pronounced. This creates two key scenarios for the second half of the season: a partial recovery of deep-water exports would bring a large volume of competitively priced Ukrainian wheat back to the market and increase pressure on global prices, while a prolonged blockade would preserve logistics shortages, high costs and the risk of stocks accumulating within the country,» the experts believe.

Price dynamics are moving in opposite directions on the external and domestic markets. Restrictions on Black Sea logistics in Ukraine and russia have supported global quotations, but Ukrainian producers are not receiving the full benefit of this increase due to higher delivery costs and weaker competition among buyers within the country. The gap between global and domestic prices for milling wheat has widened, prompting farms to hold back sales, as current price levels cover production and logistics costs only partially.