Russian wheat export prices continue to fall amid new crop supply

Russian wheat export prices continued to fall last week, supported by the arrival of the new crop on the market following an early start to the harvesting season.

Early estimates of July exports suggest a possible sharp decline, analysts said.

The price of 12.5% protein Russian new crop wheat scheduled free-on-board (FOB) with delivery in August was $216 per metric ton at the end of last week, $10 lower than a week earlier, according to the IKAR consultancy.

Sovecon determined the price of wheat with a protein content of 12.5% for the nearest delivery at $221-224 per ton at the end of last week, down from $227-$229 per ton FOB.

IKAR head Dmitry Rylko linked the price drop to the approaching peak of the harvesting campaign and seasonal supply.

“The Russian domestic market is beginning to feel the pressure of the harvest,” Sovecon said in a weekly note.

“Southern farmers are selling actively despite a sharp decrease in CPT bids at the ports, likely reflecting a need to replenish working capital, which is uncommon for the wealthy southern producers.”

Last week Sovecon revised the new Russian wheat crop forecast up to 84.1 million tons from 80.7 million tons previously, with production numbers for all key regions adjusted higher.

As of June 28 Russian farmers had harvested 10.3 million tons of grain against 2.1 million tons a year earlier, from 2.4 million hectares, up from a previous 0.5 million hectares.

The average yield was 4.25 tons per hectare, up from 3.97 tons a hectare the year before.

The wheat harvest totaled 6.9 million tons, up from 0.2 million tons, from 1.47 million hectares, against 0.03 million hectares, with an average yield of 4.68 tons per hectare, versus 4.57 tons.

Next week almost all regions are predicted to be mainly dry, Sovecon noted.

According to Roman Vilfand, scientific director of the Russian Hydrometeorological Centre, “the strongest heat” is expected in the southern regions of the country.

Russia is the world’s largest wheat exporter. Its exports rose to 0.84 million tons of grain last week from 0.79 million the week before.

Shipments included 0.70 million tons of wheat, up from 0.68 million tons a week earlier, Sovecon wrote, citing port data.

Sovecon kept unchanged its wheat export estimate in June at a record 4.0 million tons, compared to 3.6 million tons in June 2023.

The first estimate of July shipments is 3.0 million-3.5 million tons compared to a record 4.5 million tons a year ago.

“Shipments are expected to drop amid a sharp decline in traders’ margins and a smaller southern crop,” Sovecon said.
Source: Reuters (Reporting by Olga Popova; Editing by Gleb Bryanski and Jan Harvey)