Ukrainian Grain Prices Will Stay High in 2022

Prices for Ukrainian grain from the 2022 harvest will be high. This is due to an increase in production costs. The rise in the price of mineral fertilizers was especially noticeable. Another reason for the high prices is the low amount of precipitation in the fall.

The growth in prices for mineral fertilizers in Ukraine in 2021 was unprecedented. The price of urea, one of the most popular formulations for cereals, reached USD 800 per ton in November 2021 on a FOB basis. Thus, the growth was 80% compared to July 2021. On an FCA-plant basis, the situation is even worse. The price of urea was USD 1,100 per ton, which is 120% higher than the price level in March 2021.

This is largely due to the general rise in nitrogen prices in the world. The Profercy World Nitrogen Index reached 407.5 points in November 2021. The growth compared to 2020 was 226%. One of the world's largest producers, Saudi Basic Industries Corporation, is selling urea at $ 850 per ton on a FOB basis. This figure has become a record for 13 years.

The abnormal growth in fertilizer prices is associated with several factors at once. These are export trade duties in China, which is the largest supplier of mineral fertilizers, the rise in gas prices, and a decrease in ammonia production. All of this, combined with seasonal demand, has resulted in a skyrocketing price spike.

In addition to high grain prices, the lack of urea can lead to another problem – deterioration in quality. Nitrogen fertilizers are important for grain as it is the main nutrient for crops. Lack of nitrogen can lead to a decrease in protein content.