Tension rises on Ukrainian market due to imminent expiration of grain corridor – Barva Invest

KYIV. Feb 16 (Interfax-Ukraine) – There is a strong increase in sales on the Ukrainian crop market, as farmers are trying to export the maximum volume of products due to the expiration of the Istanbul Grain Agreements in March, thanks to which agricultural products are exported by sea from the ports of Greater Odesa.

According to the Telegram channel of the consulting company Barva Invest, in March the issue of resuming the grain corridor may drag on for another month, and this uncertainty leads to an increase in supply and minimization of demand from traders in deep-water ports.

As emphasized, in the near future, grain traders working for cash will be significantly affected by the entry into force of bill No. 8166-d on optimizing foreign exchange earnings from the sale of agricultural products.

“The VAT deposit law for exporters could hit the cash market hard. With the official exchange rate stable and the unofficial exchange rate much higher, the cash market has flourished. But now, with the war and ultra-high logistics costs, the ability to sell 10% more expensive than in a transparent way is actually almost the only salvation for some manufacturers who otherwise sold in the red,” Barva Invest points out.

The consulting company emphasizes that No. 8166-d will legalize the “gray” agricultural market, and “on paper” is a boon for the Ukrainian economy and society. However, from the point of view of the impact on the viability of the Ukrainian agricultural sector and agricultural producers in the conditions of war, strategically, such a law can lead to significant negative consequences that will affect the planning of expenses, crop rotation, renewal of the fleet of equipment, savings on fertilizers, wages, etc.

“The proposed mechanism of restrictions for the ‘gray’ market will cause an almost complete halt in the activity of this segment for some time. As a result, this will significantly reduce the supply of corn and sunflower (and their processed products) on the external market. There may be short-term concerns of external buyers, which will temporarily keep purchase prices from sinking, or even support their growth,” Barva Invest specified.

In addition, the company predicts a decrease in the cost of logistics of agricultural products, which will partially prevent a fall in prices for it.