Andrey Sizov
21.05.2024
SovEcon experts forecast that Russia might match last year’s record-high wheat exports of 4.1 million metric tons (MMT) and exceed the five-year average of 1.5 MMT. The expected high level of exports is due to the Russian wheat’s strong competitiveness.
The competitiveness of Russian wheat has significantly increased. By mid-May, Russian wheat was offered at $238 per metric ton (MT) FOB, $21 cheaper than French wheat. This price spread between Russian and European wheat is the highest since the end of July 2023, when the Black Sea grain deal was canceled.
Prices were primarily supported by the deteriorating crop prospects in Russia. Due to weather anomalies in Central and Southern Russia, SovEcon lowered its Russian wheat production forecast in early May by 7.2 MMT to 85.7 MMT.
Amid deteriorating prospects for the new crop, demand for wheat from buyers has revived. On May 8, the Egyptian company GASC purchased 300,000 metric tons (MT) of Russian wheat and 60,000 MT of Romanian wheat, compared to 120,000 MT of Ukrainian wheat on April 16. The average price was $279/MT (CFR, 270-day LC) compared to $256/MT in April.
The competitiveness of Russian wheat may have increased due to slowing Ukrainian exports. As of May 17, Ukraine had exported 0.8 MMT of wheat, 29% less than the previous month.
Activity among Russian exporters has also increased compared to last month. The amount of outstanding sales of Russian wheat as of May 21 totaled 1.9 MMT, up from 0.9 MMT a month earlier. Exporters have become more active due to the distribution of additional export quotas.
With high competitiveness and historically high stocks, export pace is expected to remain high in the short term. However, the price spread with European wheat is likely to narrow.
Subscribe to our newsletter to receive Black Sea analytics delivered directly to your inbox!
