Ukraine expects more feed wheat, lower quality in 2022/23 MY

Ukraine is expected to have more feed wheat and overall lower quality in the newly begun 2022/23 marketing year, due to the impact of weather and lost territories, trade sources said.

Ukraine has already harvested more than 82% of the planned area of wheat, with 15.5 million mt already in the bins, and trade sources that Agricensus talked to said the quality over all was expected to be lower this year, with a large share of feed wheat.

“I know that the quality is bad, but I have not seen any ratings yet; I think more than 50% is rated as feed. We also used to have high protein wheat in the south and the east, in the steppe, while in central and western parts it was lower. And this year its unlikely that some additional fertilizers were added for the quality,” an analyst said.

Currently, most of the southern and eastern regions of Ukraine are occupied by Russian forces or are areas of active fighting.

"I expect poor quality this season – 60/40 or 55/45 share in favour of feed wheat. There were heavy rains before the harvest and less fertilizer was applied. Usually we have more food, but not this time,” a second analyst said.

But he added that in general it is possible to mix good quality old crop with lower quality new crop to attain a more normal average quality level.

This change is also reflected in price levels discussed in the market, as the gap between 12.5% and 11.5% protein wheat has increased to $20/mt, and the gap between 11.5% and feed wheat has increased to at least $10/mt.

By comparison, last year the gap was nearer to $5-7/mt between 11.5% and feed wheat, and there was a lack of offers of both, but there was plenty of offers of Ukrainian 12-12.5% protein wheat with little premium over 11.5%.

At the same time, trade sources said the current situation may give a distorted picture of actual grain quality as farmers are likely to sell lower quality grain first. 

Origination is going very slowly as most of the big companies are still trying to move out their own stocks and crops rather than buy from producers, so the market does not yet see the wider picture. 

Russia has faced similar quality issues this year, and although a record crop is expected at around 90 million mt, the quality so far has been lower than last year. 

The spread between Russian protein grades has also has increased to $20/mt, while in the 2021/22 marketing year there was a lack of 11.5% wheat, and 12.5% and 13.5% wheat were offered at the same price at some points due to high aviability.