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Experts predict a further drop in wheat prices

17.03.2023
Experts predict a further drop in wheat prices

At the International Conference "EURASIAN AGRICOM" a separate session was devoted by experts to forecasts of the futher development of grain market. Analysts are concerned about growing stocks of grain on the world market, including Kazakhstan. The most alarming sounding is the balance of wheat - 11.5 million tons as of February 1. This is a record volume for the last five years, World of NAN reports.

Sergei Potapov, General Director of Viterra Kazakhstan LLP, believes that simply reducing production amid growing grain reserves may seem like the right move. But it cannot be the solution to the problem. Since the trend of growth in world grain production will continue. The expert believes that the solution lies elsewhere.

"In this context, we need to maintain our own exports and our own growth of domestic consumption to achieve a balance. To remove surplus grain and avoid its oversupply on the domestic market. Thereby weaken the pressure on prices," Potapov said, speaking at the conference.

Besides, he said it's important to understand that Kazakhstan is no longer the main player in the region in terms of exports.  As Russia continues to demonstrate its export ambitions and more and more actively "plays" in the market.

In this regard, the expert believes that Kazakhstan needs to develop its own competitive advantages, such as proximity to traditional markets, the absence of sanctions pressure, as well as a similar mentality.

At the same time, analysts' forecasts are still pessimistic.

"We are expected to have absolutely record-breaking carryover stocks. This is not good for agricultural producers and traders in general, as well as for all those who were expecting price growth and who adopted a wait-and-see attitude.  It was probably the wrong decision," Potapov said.

As for export shipments, according to Potapov, 56% of the expected volume for the whole season has been exported during 6 months of the current season. This is 3.9 million tons of grain. The rate, despite all the logistical difficulties, is at least not lower than last year, the speaker assured. However, it is hard to predict the future picture.

"As of February 1, according to our evaluation, we have an absolute record in terms of stocks - 11.5 million tons of wheat. This is a huge balance. Frankly speaking, it is hard to imagine how and where we will go, taking into account that it is the second half of March," the speaker shared.

From all of the above, he concluded that the record stocks with declining demand are definitely a downturn and will lead to a rebalancing of the market and a further decline in prices. A reduction in the number of buyers together with the loss of export destinations could also lead to an even greater slowdown in exports and an additional imbalance in the market.

 


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