SovEcon: Russia may export record-high wheat volume in June

Russia actively exports wheat at the season’s end, but shipments may slow down in the long term.

SovEcon estimates Russian wheat exports in June at 3.5-4.0 million metric tons (MMT), up from 3.6 MMT a year earlier and significantly above the five-year average of 1.6 MMT. June could set a new record for the month, as Russia actively exports wheat at the season’s end, although shipments may slow down in the long term.

The surge in global market prices over the past month has supported sales of Russian wheat. In May, the September wheat contract on the MATIF exchange rose 14% to €259/MT ($281/MT).

Amid the robust growth in quotes on Western exchanges, the spread between French and Russian FOB wheat prices reached $25, enhancing demand for the latter.

High activity from foreign buyers has supported wheat prices in the Russian domestic market. In May, the price for wheat with 12.5% protein rose by 3,225 rubles to 14,125 rubles/MT.

However, the situation changed in June, potentially restraining Russian exports. From June 3 to 12, wheat quotes on the MATIF exchange fell 7% to €240/MT ($259/MT).

Due to the decline in the global wheat market, the competitiveness of Russian wheat began to deteriorate. In June, the Egyptian company GASC held two tenders at which it purchased 1.3 MMT of wheat from Ukraine and the EU, ignoring the more expensive Russian offers.

An additional limiting factor could be Turkey’s wheat import ban from June to October. Turkey has been the largest buyer of Russian wheat in the last three seasons.

Russia is concluding the 2023/24 with record export volumes, but exports are expected to decrease sharply in the new season. The decline is preliminarily estimated at 10% or more YoY. An updated export forecast for the new season will be published later in June.

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