Ukraine : Why is the price of new crop wheat increasing
Ukraine’s wheat prices rose as old and new crop values converged at $240/ton FOB amid easing war-risk premiums and stable exports. Weather concerns and forecasts of a 37-million-ton drop in global wheat production supported markets, though comfortable stocks may limit severe shortages and future price spikes.
The Ukrainian wheat market has started to move according to the logic laid down by Euronext several months ago. And although the new crop in Ukraine is not yet trading at a premium to the old one, the price difference between seasons has practically disappeared, says Victoria Blazhko, Head of Editorial Content and Analytics at ASAP Agri.
As of May 7, according to ASAP Agri, Ukrainian food wheat 11.5% on an FOB basis was offered by sellers from both old and new crops at $240/ton. On a CPT basis, buyers were willing to pay around $224/ton regardless of the season.
“For the Ukrainian market, this is a significant change compared to the previous season. A year ago, at the beginning of May, the new crop wheat on a CPT basis was trading at a discount of almost $20/ton to the old one. Overall, last season the forward market started at much lower levels, partly due to the military risk premium that buyers factored into the prices of Ukrainian grain. This year, this premium has practically disappeared due to stable maritime export operations,” Blazhko notes.
According to her, currently the Ukrainian market is clearly following the global one, where wheat prices continue to rise. The main driver is the expected significant reduction in global wheat production in the new season. The market has entered a classic “weather phase,” where any risks to the crop quickly affect prices.
“This scenario was described by ASAP Agri back in February in a material for Latifundist. At that time, we pointed out that after the record 2025/26 season, the futures market began to factor in a reduction in wheat production in key exporting countries, which sooner or later was to materialize in the physical market,” Blazhko believes.
At that time, these were just preliminary estimates. Back then, ASAP Agri estimated a potential reduction in wheat production in the 2026/27 season in eight key exporting countries – the EU, Russia, Ukraine, the USA, Canada, Australia, Argentina, and Kazakhstan – at about 32 million tons compared to the previous season.
Ahead of the release of the WASDE report with the first balances of the new season, which the USDA will publish on May 12, ASAP Agri analyzed the first forecasts of USDA agricultural attaches (FAS USDA) to assess what figures the market may see in the report.
According to FAS USDA forecasts, wheat production in the eight key exporting countries in the new season could decrease by approximately 37 million tons year-on-year – to about 399 million tons. The largest decline is expected in the EU (to 136.8 million tons), as well as in Australia (to 29 million tons) and Argentina (to 20.7 million tons) after record harvests in the previous season.
Canada and Kazakhstan will also reduce production by 4-5 million tons due to a return to average yields and weather factors. The US is forecasted to have about 50 million tons (-6% y/y) amid reduced sown areas to a minimum since 1919 and poor condition of winter crops.
At the same time, Ukraine and Russia remain relatively stable: the crop in Ukraine is estimated at 22.7 million tons (-5%), in Russia – about 89.7 million tons. The main risks for both countries are weather conditions.
Despite a significant reduction in production, export supply will decrease less sharply – only by 10 million tons, to 255 million tons.
After the record 2025/26 season, the world enters a new marketing year with comfortable wheat carryover stocks, partially offsetting the expected production decline. Thus, the market is more likely to return to a balanced state rather than move into a phase of acute deficit, adds Blazhko.
“That is why the current price increase looks primarily like a reaction to weather risks. Depending on the weather and crop conditions in key producing countries, volatility may continue to rise, supporting further price increases. However, with the start of the harvesting campaign in the Northern Hemisphere, wheat prices worldwide, including Ukrainian ones, may again feel the traditional seasonal pressure from the arrival of the new crop and a shift in focus to physical supply,” she concluded.
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Source : Agro News.UA
