Andrey Sizov
26.02.2025
SovEcon has lowered its Russian wheat export for the 2024/25 season by 0.6 million metric tons (MMT) to 42.2 MMT. Last season, Russia shipped 52.4 MMT, with a three-year average of 44.2 MMT. The revision reflects the slow shipment pace.
Export pace remains below average. SovEcon estimates wheat exports in February at 2.0 MMT, compared to 4.1 MMT last year and an average of 2.9 MMT over the last five years.
The primary constraint on wheat sales is the low profitability of export operations. The current margin for Russian exporters is negative, whereas in November, it was about $10.
The Russian government has set a wheat and meslin export quota at 10.6 MMT. We believe that major traders, who received the main quotas for February through June, will not rush shipments, primarily focusing on increasing their margins. Against this backdrop, the quota may not be fully utilized.
In the short term, the strengthening of the ruble also acts as a deterrent to exports. On February 21, the Central Bank of Russia set the dollar rate at 88.5 rub, compared to 102.0 rub a month earlier. Meanwhile, the weekly duty reflects the strengthening of the ruble with a lag.
The slow pace of Russian exports has been one of the factors supporting global prices. Since the start of the year, prices for Russian 12.5% wheat have increased by $12 to $248/mt FOB.
In February, the USDA lowered its forecast of Russian exports by 0.5 MMT to 45.5 MMT.
SovEcon also increased the export forecast for the 2025/26 season by 0.6 MMT to 38.9 MMT due to the reduction in export rates this season and the increase in carryover stocks.
The market remains too optimistic about Russia’s wheat export potential this season. Limited domestic supply, a strong ruble, and negative exporter margins suggest that the export pace is unlikely to accelerate substantially in the near future. With historically tight global wheat supply and demand balances, this should provide support to global prices until the end of the season.
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