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The price of flour is rising in Ukraine – forecast

The main factor in the decrease in the price of flour in July 2022 was the limited export of all agricultural products from Ukraine, including wheat.

Svitlana Lytvyn, an analyst of the Ukrainian Club of Agrarian Business (UKAB), said this in a comment to RBC-Ukraine.

“This has led to a collapse in wheat prices due to oversupply on the domestic market, as Ukraine grows 3-4 times more wheat than it consumes,” she said.

According to her, last year, a record year, Ukraine collected 32 million tons of wheat for domestic needs of 7 million tons. a significant share of the wheat intended for export managed to be exported before the start of the full-scale invasion of Russia on the territory of Ukraine, but not all of it.

“The pressure of excessive supply, as well as the arrival of the new year’s harvest, led to a price decrease with minimum indicators in July. At the same time, since the beginning of the war, other components of flour production, such as energy resources, fuel, and, accordingly, logistics costs began to increase. Therefore, these oppositely directed vectors allowed the price of flour to decrease only in July,” the analyst added.

As Lytvyn noted, now export shipments are gradually recovering, and the price of wheat has begun to rise slowly, but its level remains quite low so far. “Establishment of full-fledged export will lead to equalization of prices on the market,” she said.

“It is worth noting that everyone should be interested in the establishment of exports, because otherwise farmers will not have the financial opportunity to continue their production. This may lead to a significant decrease in production volumes and a rapid increase in prices already next year. Therefore, the further scenario will completely depend from the extent to which export shipments can return to the pre-war level,” the UKAB analyst stated.

Earlier it became known that a third of sugar factories in Ukraine will not work this year. Ten plants out of 32 will shut down due to the war and high gas prices.