Last week, Russian 12.5% wheat prices in deep-sea ports rose $2 again to $259/mt (FOB), in shallow-sea ports climbed $3 to $240, as per SovEcon Russian market weekly report. The market was supported by issues with Russia’s customs and earlier rally in global benchmarks.
Since mid-week Russian traders started to report issues with customs. Many market participants were experiencing extra checks and delays in obtaining export documents. Many say that this could be aimed at slowing down exports before the wheat tax and quota become effective on February 15 (see an earlier article). As of Friday, these issues were not resolved. However, we hear on Monday that the delays became substantially smaller, i.e. around a day compared to several days earlier.
Bids in ports were sharply down last week. On Monday 12.5% wheat prices fell by more than 2,000 rub/mt to 15,200 rub CPT deep-sea. However, during the week many traders started to up prices gradually on limited farmer’s sales. At the end of the week average prices stood at 15,700 rub/mt (-10% week on week; $209/mt).
The domestic grain market was shocked after the export tax news. Many buyers just stopped any purchases in the first half of the week hoping to see a massive sell-off. It hasn’t happened. Around mid-week some buyers started to return to the market. Farmers are gradually adjusting to lower bids but it doesn’t look like panic, at least for now.
Russian FOB is expected to move slightly higher or remain close to the current levels.
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