Russian wheat ruble prices lower, harvest pressure at last?

Last week, domestic wheat prices dropped in Russia by 1.5%, which was the fist decline after several weeks of rapid growth.

Last week, prices in the Russian market went down after several weeks of strong growth. Average 4th grade food wheat (12-12.5% prot.) fell 1.5% to 15,125 rub/mt, as per SovEcon’s assessment (USDRUB 73.6).

The reasons for the weakening are the expectation of an increase in the export tax and a decrease in bids by many buyers in the last 1-2 weeks. This overlapped with the growing need of some farmers for cash to finance the winter planting campaign or to pay off loans. Some also need to free up the storage for late crops, like sunflower and corn, which harvest is starting now.

Domestic processors from the middle of the month have lowered prices by 500-1,000 rub/mt. In deep-sea ports, exporters’ bids dropped on average to 16,700 rub/mt versus 17,000 rub/mt. In mid-August some exporters for a short period of time were paying as much as 17,500 -17,800 rub/mt.

The ruble market has been rising fast for around a month since mid-July adding about 20% amid substantial cuts of the new crop and a rapid rise in export prices.

In the short term, we expect to see a weaker ruble market amid the pressure from growing export tax. At the same time, the downside seems limited. The sunflower harvest is starting and many farmers are likely to switch to selling it instead of wheat. We also believe that many domestic buyers are still short and will have to speed up the buying soon.

The bottom line is don’t expect any substantial harvest pressure to drive down ruble prices and boost exports which are currently lagging. We estimate August wheat exports at around 4.4 mmt (-8% YOY).

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