Double increase of wheat prices in Bulgaria, France and Hungary observed over a year

m.dimitrova@klassa.bg

Just within a year a twofold increase in the price of wheat was observed in Bulgaria, Hungary and France. The three countries top the ranking on a global scale. At least a 58% grain price increase was registered in the US, while there was an 86% price increase in Ukraine and 98% in Germany, announced Antonina Belopitova, Head of Department with the Sofia Commodity Exchange (SCE).

In early June the International Grains Council (IGC) reported that it was expecting a corn output of 667 million tonnes, which is 5 million tonnes less than the figures estimated for May. The amount is quite low also compared to 2009 and 2010. The drought affecting the main EU wheat producers such as Germany, France, the UK and Poland, as well as the rainfalls in the US corn belts were the main reasons for the pessimistic outlook. Analysts expect the wheat stocks to shrink up to 187 million tonnes. In fact, last their amount stood at 198 million tonnes. Besides, the SCE also forecast that the volume of the Bulgarian grain harvest will be within the range of 3.8 million tonnes. Last year, Bulgaria produced some 3.9 million tonnes of wheat.

Russia and Ukraine repealed the imposed restrictions on exports, but this didn't really affect the market. After the initial euphoria, which caused a slight price fall, the rates climbed back again. The good harvest expected by both countries, however, will hardly compensate for the depleted global stocks.

Currently, the SCE has multiple tender offers for supply of sacked flour of 50 kg directly from the mills, including the wheat flour type 500 worth 540 BGN per tonne, VAT excluded and the flour type 700 worth BGN 500 per tonne.In fact, global analysts are monitoring the climate change, which is the main price-determining factor.

It is very difficult to make any forecasts, commented Vasil Simov, SCE CEO. He argued that the climate could abruptly reverse all expectations. It also depends largely on whether Russia and Ukraine, which are the largest market factor in Europe will trade freely. They will seek first to provide the market search of their own wheat and will appear on the international market only after stabilising their own trade balance.

The SCE purchasers have bid at levels of 350-360 BGN, VAT excluded per tonne of grain from the new harvest, but nobody has offered quantities at this price. Surely, we can see that in June 2011 the tender base prices of both wheat and maize started were much higher, said also Simov. He assured the public that there would be no problem with grain balance in Bulgaria. Should any surprises arise during the cereal harvest, there is a real outlook for overall 1.9 million tonnes of wheat to be allocated for exports.

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