Will EU wheat and barley imports from Ukraine be blocked?
The EU have a great responsibility for our collapsing domestic prices. Since the full opening of the EU markets to Ukraine, in May 2022, our prices have been destabilized by these massive and cheap supplies. Will the EU finally take appropriate measures to protect farmers?
Farmer protests have returned, all over Europe. Indeed, EU officials did not consider their requests. They claim that solidarity with Ukraine is more important than protecting EU farmers. However, we can question the solidarity needed, now that Ukraine sea port exports are back to pre-war levels. Consequently, Ukraine now has full access to their pre-war third country demand. So, why would they need Europe to sell their wheat? It is a total nonsense …
In total, since May 2022, more than 10MT of wheat and 2MT of feed barley has entered the EU market from Ukraine. The largest importer, with 70% of the imports, is Spain.
Before the war, the EU used to import 2.5MT of wheat and less than 1MT of barley. In 2022/23, imports raised to 9.4MT. This season, they could reach 11MT (6MT has already been imported, of which, 4MT just for Spain).
The impact for EU markets is massive. Indeed, countries like Germany or Spain used to import their needs from other EU countries. They don’t anymore, creating a massive deficit of intra-EU demand. The impact on wheat basis is huge, they are down €40 to €80 as they simply cannot find demand for their local production!
For the UK, the situation is similar. Even if we do not significantly import wheat or barley from Ukraine, we are indirectly penalized as, our first client, Spain, does not need our supplies any longer as they have full access to cheaper supplies…
Slow exports and strong imports are the perfect cocktail for low ex-farm prices. For many farmers the question is not only selling at low prices but finding a buyer! This is unique in our market history, and it needs to urgently change.
Currently the good news is that for the last 2 weeks, wheat and barley imports have been considerably reduced, from 300KT per week to less than 50KT now. We see different reasons for this.
First, Ukraine is back on the world market. For instance, 70% of the wheat sold to Egypt last week was Ukrainian. Second, EU and UK wheat prices are now so low that they are starting to be competitive versus imports.
EU officials may soon listen to angry farmers and take urgent measures to limit the level of imports now and for the coming seasons. If they do so, the impact on local prices would be significant as intra-EU trade flows would rapidly resume and our prices would directly benefit. They will probably not act unless Spanish, French and Polish farmers continue to pressurize them.
It is a real watch point as it could finally bring a bit of support to the very low EU and UK current prices. We have seen, this week, the first positive signs on prices...
Sebastien Mallet / ODA UK - CEO
sebastien.mallet@oda-agri.com
Main Office: +44 1223 894 791
Mobile: +33 6 82 83 71 87
