• The price of cereals is again at alarming levels, due to the tense international context. The price of Romanian wheat is directly influenced by the tensions in Ukraine.
For the first time since 2013, a ton of wheat, in the port of Constanța, ended up being over 300 euros, over 31% more than in the same period last year.
On February 3, 2022, data from the European Commission indicated an average FOB price of 306 euros per ton for bread wheat in the port of Constanța. The average price of corn FOB on 27.01.2022, in the port of Constanța, was 227 euros per ton.
What fluctuations international tensions bring
Quotations for Romanian wheat have further depreciated, and the premises are still decreasing. The latest estimates show that there is enough goods in the market, given that there are not many buyers in the Black Sea basin. The only problems, according to Economica consultants, could arise if the Russian-Ukrainian conflict escalates.
"At the moment there are no premises for price increases. There are not many buyers in the Black Sea basin. The only thing that can change the trend is the conflict between Russia and Ukraine", declares for Economica Cezar Gheorghe, senior consultant and analyst at the Romanian Farmers' Club.
Victor Beznea, general manager of grain trader Patberg INTL and Secretary General of ARCPA - Romanian Association of Agricultural Products Traders adds that: "Tensions between the two major producers / exporters from the Black Sea have raised the prices of both wheat and corn , in the initial phase. However, since there was no military movement, meanwhile, the price of wheat calmed down, falling to levels around 261-262 euros / ton DAP Constanța. Maize remained firm, rising to levels around 245-247 euros per ton DAP Constanța".
World market forecasts
World grain production is expected to increase, according to USDA, from January by 2,7 million tonnes a year in 2021-2022 to reach 778,6 million tonnes, mainly due to good harvest prospects in Australia and Argentina.
According to the latest USDA estimate, Argentina's wheat production for the 2021/2022 marketing year is estimated at a record 20,5 million euros, up 3% from last month's estimate and up 16% year-on-year last. Analysts also expect Australia to deliver more, at about 34 million tonnes.
USDA he estimated that Ukrainian wheat production for the 2021-2022 marketing year will reach 33 million tons, with about 24,2 million tons of this volume to be delivered. In 2021-2022, Ukraine's wheat production and exports are expected to increase by 30% and 44%, respectively, compared to the previous year.
Romanian farmers at a loss
Addressing the current situation and its influence on the Romanian farmer, Nicolae Sitaru, president of the Association of Cereal and Technical Plant Growers from Ialomița County and president of the Romanian Maize Producers Association (APPR) declares: "There were higher increases because there were fears that Ukraine no longer delivers. But now, the grain price is better, about 15% higher than last year, but not spectacular. Not if we also refer to the other price increases. It's normal to have concerns, because this is where the prices for the rest of the food go. The problem is what will happen in the future. If for cereals we are talking about 10% price increases, for fertilizers the prices have increased by 400%. I, for example, compared to 2020, currently pay 1.000% more expensive electricity. But we sell grain in the EU and correlate our prices with what is on the stock market, which reacts to all the stimuli in the market".
Price capping – a negative decision
Regarding the price cap discussions, Nicolae Sitaru says for Economica: "Farmers benefited from high prices during January, but liquidity was low, as usually happens when rapid increases occur. Here I would add the fact that we are a free market and fluctuations on the international market are also transmitted to Romania, following the principle of communicating vessels. So discussions like "why are grain prices rising if we had a big harvest?", don't make sense if we understand the mechanisms of a free market."
Referring to the same discussion about price capping, Victor Beznea, general manager of grain trader Patberg INTL and General Secretary of ARCPA, points out: "You cannot ask a mill to sell flour at a lower price, if it will buy wheat at a higher price big. It would mean limiting the price to farmers as well, who can sell at a higher price, correlated with the markets around us. It would mean limiting the price of fertilizers as well, which in turn is determined by the price of natural gas. You can't ask some companies to work at a loss just out of populism. The low-income population must be helped through other forms of protection. (...) It is certain that for a while we will have to get used to higher prices than in the past for cereals and more".
Article written by Gabriela Dan, Editor of Arta Albă
Read on White Art and: Difficult economic context for the milling and baking sector
