Russian wheat higher again, how far are we from the season’s peak?

Russian wheat prices hit a new high but we think that season’s peak could be close

Last week, 12.5% wheat prices in deep-sea Russian ports rose $6 to $343/mt. The market was supported by strong demand and earlier rally in global benchmarks.

During the first half of the week, the wheat market continued to move higher but reversed sharply in the second half. 

Bulls were encouraged by news from Australia which NW regions have been too rainy (30-70 mm a week) during the wheat harvest. 

However, currently, the models predict drier weather. As per local sources, wet weather had some impact on quality but not on quantity.  The country is to harvest another bumper crop. USDA says 31.5 mmt vs record-high 33 mmt last year and 14.5 mmt in 2019. Local forecasters are even more optimistic. Official ABARES’ estimate is 32.6 mmt while private forecasters talk about 34-37 mmt. 

Outside markets put a lot of pressure on prices.

The commodities markets were sharply down on concern about the new Covid-19 variant found in South Africa. 

We believe some investors are closing their long positions and taking the profit after the long rally in wheat. 

The wheat demand in Russia’s ports remains strong. 12.5% wheat bids in deep-sea ports increased to 17,800-18,000 rub/mt from 16,700-17,500 rub/mt a week ago, in shallow ports rose to 15,500-15,800 rub/mt from 15,200-15,700 rub/mt.

Traders’ margins remain high and a recent decrease in transshipment fees would help them further.

Global wheat S&D remains tight and perhaps we could see higher highs during the next weeks after the end of this correction. However, we feel that bears are becoming stronger and the seasonal peak could be close or perhaps behind us. 

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