Last week, 12.5% Russia’s wheat prices in deep-sea ports rose sharply, again by $8, to $222/mt. 12.5% wheat prices in shallow ports went up by $4 to $198/mt. The market was supported by strong demand from importers. Russian wheat starts to lose its competitive edge after the recent rally.
Several big tenders were announced recently helping stronger FOB wheat values. The biggest ones were Turkish 0.5 MMT tender and Saudi’s 0.7 MMT tender. The Black Sea countries have been approved by Saudi Arabia as potential suppliers since 2019/20.
Dry weather around the Black Sea and in France and Germany threatening winter wheat planting campaign remains on bulls’ radar.
News from Russia remains the biggest bearish story at the moment. Big Russian wheat crop is getting bigger. We upped our wheat forecast by 0.7 MMT to 83.3 MMT last week on better than expected yields in Siberia. [USDA, 78 MMT, really??]
After a sluggish start, exports from Russia run at a record pace, very in line with our expectations. In September wheat exports could reach a new monthly all-time high of 5.1 MMT or above. Total grain exports are estimated at around 5.7 MMT.
From the beginning of the season to the September 10, 10.2 MMT of grains were exported, which is 1% lower YoY. Wheat export totaled 8.5 MMT (-5% YoY), barley – 1.5 MMT (+38% YoY), corn – 0.22 MMT (-35%YoY), according to customs. 11.2 MMT of grain, including 9.5 MMT of wheat, 1.4 MMT of barley and 0.25 MMT of corn were exported, according to ports’ data.
Russian FOB values have almost reached French ones, the spread was much bigger, $10+/mt, a few weeks ago. This is likely to limit the further increase in the Black Sea prices.
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