Ukrainian wheat exports are currently loss-making – Vysotskyi
Ukraine’s wheat exports have become unprofitable as logistics costs exceed $100 per tonne despite export prices rising to $275. High costs could reduce farmers’ wheat acreage, threatening export supply as production averages 24 million tonnes against 6 million tonnes domestic consumption.
Ukrainian wheat exports currently fail to cover producers’ costs due to sharply higher logistics expenses, Agriculture Minister Taras Vysotskyi said. According to him, even higher global and export prices are not enough to offset the cost of delivering grain to foreign markets.
Wheat production costs under a favorable scenario are estimated at around $150/t. In early July, farmers could sell wheat for shipment through the deep-water ports of Greater Odesa at about $205/t excluding freight, which still allowed for some margin.
The export price of wheat has now risen to around $275/t, but additional logistics through Danube ports and onward access to the Black Sea cost more than $100/t. After other producer expenses are included, wheat exports become loss-making, Vysotskyi said.
If the situation persists, it could affect farmers’ planting decisions. According to the minister, producers may consider reducing wheat area if they do not see an opportunity to sell the crop profitably.
Ukraine traditionally produces far more wheat than it consumes domestically. Average production is estimated at around 24 mln tons, while domestic consumption is about 6 mln tons, including 3–3.5 mln tons for food use. Stable access to export logistics therefore remains critical for the domestic grain market.
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Source : Ukr Agro Consult
