Russian wheat FOB prices are down following global benchmarks

12.5% wheat prices continue to creep lower, last week they were down $1 again to $193 (FOB deep sea) on declining global benchmarks.

USDA’s WASDE hit grain markets hard. Contrary to expectations the US corn crop estimate was not sharply lowered compared to July (average trade guess was -5%) but slightly upped, from 352 MMT to 353 MMT. Both corn and wheat markets fell sharply. Chicago wheat declined 6% to $4.71/bu (-6%; $173). Paris wheat followed Chicago; Matif contract closed the week at 168 EUR (-1.5%; $186).

Our prediction that USDA could up Russian wheat crop was wrong. It was lowered again, from 74.2 MMT to 73 MMT (ex.Crimea). The harvested area was upped from 26.3 mln ha to 27 mln ha, as expected, but the yield was sharply down, from 2.82 mt/ha to 27 mt/ha. The most recent SovEcon’s estimate is 74.4 MT (inc. Crimea’s 0.9 MMT).

GASC hold another tender during the week. The Egyptian company often appears in the market after rapid sell-offs, similar to what we saw this week. GASC bought 295K of wheat, 175K from Russia and 120K from Ukraine. Prices were in $217-219 range C&F ($200-202 FOB), just marginally down from the previous tender ($217-220 C&F; $198-204 FOB). France could offer the most competitive prices but there was only one offer from them and it wasn’t cheap enough ($221 C&F; $200 FOB). It looks like the country currently prefers to serve more important and predictable markets like Algeria.

Demand for wheat and from traders in ports remains strong. 12.5% bids rose to 11,500 – 12,000 rub/mt (CPT deep sea ports) from 11,000-11,500 rub/mt. Closer to the end of the week some traders started to lower bids.

The ruble was getting weaker fast on cheaper crude and increased volatility all over the world. On Friday, USDRUB was traded at 66.4 (+1.8%). Weaker ruble helps exporters but the effect is limited as farmers tend to up their ruble price rapidly fully reflecting ruble depreciation.

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 EVENTS – SEPTEMBER 19

Ukraine and Russian grain exports speed up; wheat sell-off on Monday could be a buying opportunity

WEEKLY ROUND-UP OF BLACK SEA EVENTS – AUGUST 29

Ukraine starts large offensive in Kherson; wheat rallies 4%+ on Monday

Weekly round-up of Black Sea grain market – August 22

Ukraine warns about heavy Russian shelling this week; Russian exported 0.9 mmt of wheat

Weekly round-up of Black Sea grain market – August 15

Ukraine shipped 16 vessels from Odesa; Russian August wheat export 29% below average

Weekly round-up of Black Sea grain market – August 8

Ukraine shipped 10 vessels from Odesa; Rosstat published key Russian wheat numbers

Weekly round-up of Black Sea grain market – August 1

First vessel with 26K of Ukrainian corn left Odesa; what will happen to Russian wheat prices?