Demand from China puts Ukraine barley above top-end milling wheat

File photo of a combine harvesting a wheat crop in Ukraine. (SergBob/iStock/Getty Images)

Kyiv | Reuters — Prices for Ukrainian-origin barley from this year’s harvest have exceeded those of high quality milling wheat due to strong demand from China, analysts at APK-Inform said on Friday.

Forward contract prices for 2021 harvest barley stood at $220-$230 a tonne c.p.t. (carriage paid to) Black Sea June-July delivery, while high-quality milling wheat was priced at between $218-$227 a tonne with the same delivery date, the consultancy said (all figures US$).

“Such an atypical spread is largely due to the high purchasing activity of China in the barley segment, both old and new crops. The volumes of barley imports by China are simply off scale,” it said an a statement.

APK-Inform noted that China had bought 2.7 million tonnes of Ukrainian barley from July 2020 to February 2021 compared with 800,000 tonnes in the same period a season earlier.

The prices for the 2020 harvest barley are between $247 and $255 a tonne c.p.t. Black Sea, the consultancy said.

APK-Inform said traders had started signing forward contracts for this year’s corn crop and the prices varied between $195 and $200 per tonne c.p.t. Black Sea with October delivery and $205-$210 c.p.t. with the delivery in November-December.

Ukraine is a traditional barley grower and exporter, shipping the commodity mostly to North Africa and the Middle East. The country also exports wheat and corn.

Ukraine harvested 7.8 million tonnes of barley in 2020 and is likely to export 4.2 million tonnes in the 2020-21 season, according to APK-Inform estimates. The government sees the exports at 3.815 million tonnes in the 2020-21 July-June season.

Ukraine’s economy ministry has forecast that the barley harvest could rise to 9.2 million tonnes in 2021 thanks to a higher sowing area and better weather conditions.

— Reporting for Reuters by Pavel Polityuk.

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