During the week ending September 20, the average price for class 4 wheat in the European part of Russia dropped by 400 rubles to 12,000 rubles, as per SovEcon price monitoring. Wheat had last fallen to such levels at the end of June. Decline in wheat prices continues amid the falling demand.
Domestic demand for wheat remains weak as flour mills and livestock breeders have sufficient wheat stocks.
Exporters are also reducing their wheat purchases amid declining sales. As of September 26, the amount of outstanding Russian wheat sales had dropped to 4.1 million metric tons (MMT) from 6.1 MMT a month prior.
Export pace could be impacted by the attempts of the Ministry of Agriculture to regulate minimum export prices. At the last GASC tender, Russian wheat was offered for no less than $270 FOB, corresponding to the “price floor” reportedly set by the Russian Ministry of Agriculture for wheat. Consequently, Russian offers were overshadowed by more competitive prices from Romanian exporters.
Meanwhile, wheat supply remains high amid a good crop. SovEcon estimates Russian wheat crop in 2023/24 at 91.6 MMT, which is 11% higher than average.
In the short term, we expect further weakening of ruble prices, which may increase marginality for the exporters. However, we do not anticipate a significant increase in exports, as the infrastructural constraints remain the main limiting factor.
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