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

Russia’s wheat prices reverse, will Black Sea dryness help wheat bulls?

Last week, Russian wheat prices started to ease but dryness in the Black Sea should remain on the markets’ radar

Russia’s wheat prices continue to rise; September exports could set a new record

Last week, 12.5% Russia’s wheat prices in deep-sea ports rose sharply, by $8, to $222/mt. The market was supported by strong demand from importers. Russian wheat starts to lose its competitive edge after the recent rally.

Russian wheat prices below $200 again, big crop is getting bigger?

Last week, Russia’s 12.5% wheat prices in deep-sea ports fell $1 to $199/mt. The market remains under harvest pressure in Russia, weaker ruble also helps.

August WASDE report Black Sea commentary

USDA has just released the new WASDE report, here’s our quick commentary

Russia planted record-high 29.4 mln ha of wheat

SovEcon has analyzed eagerly anticipated official data on the pre-harvest wheat area in Russia released by Russia’s statistical agency Rosstat on July 24.

Will USDA up its Russia’s wheat crop forecast?

USDA cut its Russian wheat crop estimate by 0.5 mmt to 76.5 mmt in the July WASDE report. We expect it to up its fugure later, let us explain why.