Russian wheat export prices rise to nine-year high

The market was supported by limited supply, stronger ruble and perhaps new export tactic?

Last week, 12.5% wheat prices in deep-sea Russian ports rose $6 to $312/mt, as per SovEcon’s assessment. This is a record high since August 2012. The market is supported by limited supply, firm domestic market and stronger ruble.

The domestic wheat market was mostly flat. Average 3rd-grade wheat prices rose 25 rub to 15,025 rub/mt, 4th grade remained at 15,000 rub and 5th grade at 14,375 rub/mt. 3rd-grade wheat prices moved higher in the majority of the regions but tumbled in the South.

The USD-RUB pair closed the week at 71.8 (-1.1% compared to the week before last). The ruble is supported by high oil and gas prices and capital inflows to the Russian market. 

Overall activity in the grain market was low. Farmers sold part of their crop to clean up the storage and replenish working capital, domestic processors refilled some of their stocks. Farmers currently are busy with late crops harvest and winter seeding campaign and has become slow sellers again. 

Demand in ports was relatively weak, traders talked about limited forward sales, strong ruble and further increase in the export tax. 12.5% wheat bids in deep-sea ports decreased to 16,000-16,600 rub/mt from 16,200-16,700 rub/mt a week earlier.

After a long pause Russia was a clear winner at the GASC tender. Egyptian state firm bought 240K of wheat of which 180K will be shipped from Russia at a record-high price of $320.7 FOB + $31.3 freight. Romania sold 60K at $320.0 + $35.5. 

It seems that currently, Russia’s tactic is to sell only when there is a good selling opportunity and avoid direct price competition with other suppliers when it’s possible.

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