Russian wheat prices tumbled on bumper crop expectations but starting yields don’t confirm them

Last week, 12.5% wheat prices in Russia’s deep-sea ports tumbled $12 to $234/mt FOB. This was driven by weaker global benchmarks and expectations of the bumper crop.

Last week, 12.5% wheat prices in Russia’s deep-sea ports tumbled $12 to $234/mt FOB. This was driven by weaker global benchmarks and expectations of the bumper crop. However, we feel that the market could be too optimistic about the new crop size.

As of the end of the week, Russian farmers have harvested 2.9 MMT of wheat (11.4 MMT a year ago) from 948 ths ha (3.5 mln ha), with average yields of 3.07 mt/ha (3.27 mt/ha).

Such winter wheat yield doesn’t match well with bumper crop expectations. However, a relatively low starting yield is somewhat misleading at this stage. The explanation is that it currently reflects yields in Stavropol where the harvest lag is smaller compared to Kuban. Stavropol harvested wheat from 408K ha with an average yield of 3.2 mt/ha while Kuban harvested only 53K with a yield of 6.3 mt/ha. Typically, Kuban harvests ahead of Stavropol.

Still, we feel that the market could be too optimistic about the new wheat crop. Kuban’s yields are great but we suggest not to extrapolate them for all winter wheat regions. Stavropol’s yields are close to average, Rostov (#1 wheat region) above average but below record-high, very early yields in the Volga Valley are far from record-high.
Additionally, recent abundant rains in the Russian South slowed down the harvest which could lead to some quality issues and yield losses.

SovEcon’s June wheat crop estimate is 84.6 mmt, USDA – 86 mmt (ex.Crimea, which could harvest around 0.7 mmt). We expect USDA to up their crop number today reflecting a bigger spring wheat area.

The updated SovEcon’s forecast is available to sizov.report subscribers.

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

Russian wheat export quota failed to help bulls

Russian 9 mmt wheat quota looks non-disruptive to exports, says SovEcon

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

Russian wheat exports on the rise

Russian wheat exports have been growing in recent weeks. According to customs, as of the week ended November 17, 0.82 …

Ukraine to harvest a record-high corn crop in 2021, wheat production is expected to decline next year

We have revised Ukraine’s crop numbers for 2021 (bearish corn) and have issued the first 2022 wheat crop forecast (bullish!).

Black Sea wheat prices hit $325 and SRW – $8, is the rally over?

The market hit fresh highs with support of stronger global benchmarks, big tenders, and sluggish exports. But how sustainable is this rally?