As of March 29, average 3rd grade wheat price in Russia dropped to RUB 11,550 ($147) according to SovEcon estimates. This is the lowest recorded price since November 27, 2019. The decline is attributed to high wheat supply and weak demand from exporters.
Wheat supply remains high amid record-high Russian wheat stocks in 2022/23 (July-June). According to Rosstat, wheat stocks in agricultural organizations reached 17.4 million metric tons (MMT) as of March 1, which is 82% higher than the five-year average.
However, demand for wheat is declining due to relatively low exporter activity. The National Commodity Exchange estimates the volume of outstanding wheat sales at 2.1 MMT as of April 3, compared to 2.5 MMT the previous week.
The decrease in exporter demand is due to falling wheat export prices, with SovEcon estimating the average FOB price of Russian wheat on March 22 at $279/MT, the lowest level since August 2021. Exporters are likely pausing, anticipating even lower prices in the short term.
Low domestic prices are likely to support active wheat shipments from Russia during the few months. However, we don’t expect the country to increase exports substantially from current levels because of infrastructure bottlenecks.