Andrey Sizov
12.03.2024
Russian 12.5% wheat export prices last week dropped by $9.5 to $199-202/mt FOB, as per SovEcon’s assessment. This marks the lowest level since August 2020. The market is under pressure on high supply and “weak demand” narrative.
Russian exporters are increasing wheat sales. The amount of outstanding Russian wheat sales as of March 12 reached 2.8 million metric tons (MMT), up from 1.9 MMT a month earlier.
Domestic prices in Russia are tumbling allowing traders to offer lower FOB prices. Since mid-December, the average wheat price (12.5%) dropped from 11,050 rub/mt to 10,150 rub/mt last week.
Global wheat buyers remain cautious hoping to see lower prices. Last week, the Egyptian company GASC canceled a wheat supply tender. Nevertheless, last week, the Algerian OAIC bought 0.87 million metric tons (MMT) of wheat, likely sourced from the EU and Russia.
Global wheat prices have been dropping fast in recent weeks. Since late January French milling wheat (11%) price declined from $240/mt to $209/mt.
Russian wheat offers had to follow to keep its competitive edge. However, by now Russian wheat is winning demand back. The current spread between French and Russian wheat is around $8/mt compared to $0/mt in late January.
We believe that the downside of Russian FOB is limited as it has become competitively priced vs. other origins.
SovEcon is hosting a webinar on the Black Sea situation in 2024/25. Join us on Tuesday, March 19, at 9AM US Eastern / 3PM Central European / 5PM Moscow. The participation fee is $99 for everyone and completely free for Sizov Report subscribers.
