Agrarian analyst Žarko Galetin stated in an interview for “Politika” that the congestion of the Black Sea port in the Romanian city of Constanta is a potential problem for Serbia regarding the import and export of wheat.
The interlocutor presented a potential problem in the discussion on the extension of the ban on the export of Ukrainian grain to five key countries of the European Union. He emphasized that Ukraine’s export capacity has decreased. “Last economic year, which is still current, its capacity was 15 million tons when it comes to wheat,” he said. “Before that, 18 million, and now 10 million tons are expected, because the Ukrainians sowed a third less area.”
Galetin drew special attention to the Romanian port on the Black Sea. Namely, Constanta is currently full of goods. With the ban on exports from Ukraine, the delivery of wheat will most likely be transferred to the Black Sea plant. Consequently, Constanta is no longer a reference destination for Serbia, although it is still the cheapest and best export route. “Through Constanta, we have so far exported a little more than 120,000 tons, and 230,000 to Italy alone,” emphasizes Galetin. “So eventually that could be a problem if this port gets full.”
The question of the price of wheat
During the interview, Galetin also touched on the burning issue of the drop in the price of wheat on the domestic stock exchange. We will remind you that the current price of this field crop is 17 dinars per kilogram. Domestic farmers often compared the price with the price of wheat on foreign exchanges. The highest quoted price on the Paris stock exchange is RSD 28 per kilogram.
Galetin commented on the comparisons, stating that these are completely different markets, and that the prices are incomparable. He explained the difference between futures and spot markets, where so-called margins are traded on the former and that it has nothing to do with the latter. As he claims, these are only indicative prices for later delivery. Those deliveries are not delivered, but only traded in those margins worth 10% in principle. When the delivery of physical goods is actually realized on futures exchanges, the mentioned goods are on the so-called Fob parity.
The prices of wheat listed in Serbia are, therefore, on the spot market, at the parity “franko” loaded in the buyer’s vehicle at the supplier’s. “So, when it is said that the price of wheat in our country is 17 dinars, and on the stock exchange in Paris it is 28, that is simply not true,” concludes Galetin. “Because it is not wheat on the spot market and at the parity that it is at here.”
Source: Politics
Source: Bolja Zemlja by www.boljazemlja.com.
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