We have upped the 2021/22 Russian wheat exports estimate by 0.2 mmt to 34.3 mmt last week. Russia is the #1 world wheat exporter.
The increase reflects the current high export pace. The competitive edge of Russian wheat remains relatively high amid the world prices rally in recent weeks and the weaker ruble. We believe that the Russian wheat exports quota (8 mmt for February 15 – June 30) will be completely or almost completely filled.
After a pause, Russian wheat successfully returned to the GASC tenders. The Egyptian firm bought 120K of Russian wheat, 180K of Ukrainian wheat, and 120K of wheat from Romania last week.
The risk of problems with shipments from the Black Sea region due to the conflict between Russia and the West/Ukraine seems low to us. The limiting factor may be a decrease in importers’ demand and their switching to other suppliers, but this scenario looks theoretical for now.
Andrey Sizov: “In recent weeks global wheat market rallied on fears about military escalation between Russia and Ukraine. This risk seems low to us. Even in Spring-2014 after Russia began to control Crimea there was no disruption of grain exports from the Black Sea.”
USDA cut Russian wheat exports estimate by 1 mmt to 35 mmt in the January WASDE report.
[Hope you haven’t missed our previous note where we were questioning the sustainability of the recent wheat rally – the market reversed sharply last week and now is trading around -8% from the recent highs!].
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