Ruble wheat prices rise rapidly threatening exports

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.

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, SovEcon price index for 4th grade food wheat (12-12.5% prot.) rose 550 rub to 13,375 rub/mt (USDRUB = 73.3). Prices were going up rapidly all over the country, driven by strong demand from exporters and domestic buyers.

Many sellers default on existing contracts leading to more panic buying. It looks like some domestic processors after the introduction of the export tax were not prepared for such prices at the start of the season. 4th grade is the major export grade.

Estimates of the new wheat crop were cut sharply in recent weeks after Rosstat released unexpectedly low winter wheat area number. Disappointing yields in the Center and the Volga Valley also contributed to lower crop estimates. SovEcon cut Russian wheat crop estimate from 82.3 mmt to 76.4 mmt. USDA’s July estimate was 85 mmt (ex. Crimea with 0.7-0.8 mmt) and probably will be cut substantially this week in the new WASDE report.

Rising ruble prices, strong ruble, competition with other origins and unpredictable weekly-adjusted “floating” wheat export tax could mean sluggish exports during next few months. In August exports are tentatively estimated at 4-4.5 mmt compared to 4.7 mmt on average for the month.

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

Weekly round-up of Black Sea grain market – July 4

Russian wheat tax down $62; SovEcon upped 22/23 Russian wheat export estimate

Weekly round-up of Black Sea grain market – June 27

Russia could ease export tax; Ukraine and Russia starting yields

Weekly round-up of Black Sea grain market – June 20

SovEcon upped new Russian wheat crop estimate despite worsening winter wheat conditions

Weekly round-up of Black Sea grain market – June 13

Crop conditions detiorate in Black Sea; new Kremlin narrative could be a gamechanger

Weekly round-up of Black Sea grain market – June 6

Ukraine planted 4.6 mln ha of corn (+0.9 to USDA); Nikolaev grain terminal on fire

Weekly round-up of Black Sea grain market – May 30

Russian wheat planting lags by 10%, Ukrainian corn crop upped