Black Sea wheat price rallied after WASDE

Russia’s domestic wheat market is rising fast, supported by demand from exporters and domestic buyers as well as worsening crop outlook. This could negatively affect wheat exports pace during the next few months from the top world wheat exporter.

Last week, Russia’s 12.5% wheat prices in deep-sea ports increased by $18 to $286/mt. Prices rallied supported by huge cuts to global S&D in the WASDE report.

August WASDE report was bullish. The global wheat stocks came out substantially below expectations – 279 mmt vs 288 mmt. Corn stocks were estimated at 285 mmt compared 288 mmt average trade guess.

Russian wheat crop was cut by 12.5 mmt to 72.5 mmt on the smaller winter wheat area and lower yields. That could be the biggest monthly cut for Russia. The latest public SovEcon forecast is 76.4 mmt.

Canadian crop was another market mover. Total wheat production was cut by 7.5 mmt to 24.5 mmt.

Ukrainian wheat crop increased by 3 million tons to 33 million tons (SovEcon estimate – 32.6 million tons). Corn crop was +1.5 mmt to 39 mmt (SE – 39.3 mmt).

The market was expecting smaller wheat crop numbers but definitely didn’t expect such dramatic cuts. It’s quite uncommon for USDA to revise their numbers so substantially. Is this some kind of new policy?

12.5% wheat prices in deep-sea ports rose substantially. Last week bids were in 16,500-17,000 rub/mt range compared to 14,700-15,500 rub/mt a week ago (USDRUB 73.3)

WASDE report was a shocker for global and Black Sea wheat markets reacted rapidly. However, from a fundamental point of view, we feel that the top (not necessarily seasonal) could be close, somewhere around $300/mt.

Follow the Black Sea grain market

Get your free trial of The Sizov Report — an analytical service covering agricultural markets of Russia, Ukraine and Kazakhstan

Try for free

More Articles for You

Russian domestic wheat sales up in February despite weaker exports

The contradiction may have resulted from higher sales expectations of Russian exporters.

SovEcon expects a significant reduction in wheat crop next season

The expected crop will be lower than last year, but still close to the average for the last five years.

Russia may double March wheat exports — SovEcon

The country is increasing its exports, which dropped in February due to bad weather.

Russian wheat below $300 for the first time since August 2021

Prices are declining amid strong competition with other exporters.

Winter wheat prospects improved in the South of Russia – SovEcon

Recent weather conditions helped to offset precipitation deficit in the region.

February wheat export forecast lowered on stormy weather – SovEcon

Lower export levels may temporarily alleviate pressure on prices in the global market.