SovEcon cut Russian wheat export forecast for the first time this season

The estimate was revised amid sluggish wheat sales and anticipated purchases for the intervention fund.

Russian wheat export forecast for 2023/24 has been lowered by 0.4 MMT to 48.8 MMT, SovEcon said in its latest report. The analysts have cut the export estimate for the first time this season. The forecast was revised amid sluggish wheat sales and anticipated purchases for the intervention fund.

Russian wheat sales remain at a relatively low level. The amount of outstanding sales as of October 31 stood at 1.8 MMT, compared to 4.0 MMT a month earlier.

The decline in sales might be due to government attempts to regulate wheat prices. Earlier, media reports cited a “price threshold” of $260-270/mt set by Russia’s Ministry of Agriculture (AgMin). Market participants have noted that in recent weeks the price has dropped to $250-255/mt.

The expected intervention purchases by the AgMin might also lead to a reduction in exports. Dmitry Patrushev, the head of the AgMin, announced that the department would purchase up to 2.0 MMT of grain by the end of the year. Typically, a significant portion of these government purchases is wheat. Starting September 1, the cap on minimum grain prices was set at 15,620 rubles/MT for 3rd class wheat and 14,960 rubles/MT for 4th class wheat (incl. VAT).

The US Department of Agriculture raised its forecast for Russian wheat exports by 1.0 MMT to 50.0 MMT. Given current market dynamics, this estimate begins to look overly optimistic.

The slow sales pace and the decline in Russian exports are not fully reflected in the global market and could support prices in the near future.

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