SovEcon ups Russian wheat crop forecast; Russia and Ukraine could export 60+ mmt of wheat in 2022/23

Andrey Sizov 25.04.2022

* Sovecon forecasts Russia 2022 wheat crop of 87.4 mln T

* Predicts Russian 2022/23 wheat exports 41.0 mln T

Reuters: Russia will be able to increase exports in the new July-June season due to high carry-over stocks in the south of the country, a record crop forecast and the expiry of a state export quota, consultancy Sovecon forecast on Thursday.

Russian exporters have largely managed to resolve problems with logistics and the transfer of payments caused by Western sanctions imposed on Moscow since late February and are exporting wheat from the Russian side of the Black Sea and sporadically from the Azov Sea.

As one of the world’s largest exporters of wheat, higher exports from Russia will help to partly meet rising global demand in the event that Ukraine’s exports remain low and Kyiv does not regain access to its Black Sea ports.

These have been blockaded since Moscow began what it calls a “special military operation” in Ukraine on Feb. 24.

Sovecon said if a ceasefire agreement is reached by the summer, Ukraine will boost wheat exports from its southern ports quickly as Kyiv needs to sell its high stocks and obtain foreign currency to finance imports.

Both scenarios will help to ease global concerns over food security and to cool global prices, easing pressure on poorer countries where rising costs for imported wheat are hitting state budgets, Andrey Sizov, the head of Sovecon, told Reuters.

“Global demand is not going anywhere. If the Ukraine’s ports remain closed, part of the demand will switch to Russia. But if there is a peace agreement, Ukraine will start supplying very quickly,” Sizov said.

Sovecon estimates Russia’s wheat exports in the July-June 2022/23 marketing season at 41.0 million tonnes, compared to 33.9 million tonnes in the current season. Russia is on course for a record 2022 wheat crop of 87.4 million tonnes, Sovecon said, raising its forecast by 900,000 tonnes.

Ukraine, meanwhile, may export 20 million tonnes of wheat in the 2022/23 season if its ports are open again, Sizov said.

While insurance for vessels entering Russian ports has risen by $4-6 per tonne since Feb. 24, this has been absorbed relatively easily due to high wheat prices, Sovecon said.

Russia’s current exports could be higher if it was not for a state export quota which limits them until June 30. Sovecon estimates that Russia still has 3 million tonnes of wheat to export in May-June within the quota. (Reporting by Reuters; Editing by Jason Neely and Alexander Smith)