Why Russian wheat is not competitive today

Egyptian GASC is holding a new wheat tender today for 8-22 August shipment. It looks like Romania and perhaps Ukraine could be the winners today. Why Russian traders are cautious sellers?

Egyptian GASC is holding a new wheat tender today, on May 24, for 8-22 August shipment. It looks like Romania and perhaps Ukraine could be the winners today. As per traders, the lowest offer from Romania is $254/mt ($7/bu) (FOB), the lowest offer from Ukraine is $260/mt and the lowest offer from Russia is $264/mt.

Russian traders are cautious sellers because of a few reasons. First, the new floating export tax kicks in on June 2 and they want to see how it will work.

Second, despite the approaching new crop Russian farmers continue to sell slowly. In fact, the most recent official data on on-farm stocks showed that wheat stocks are historically high and just marginally below 2017/18 MY when Russia harvested a record wheat and grain crop. At the same time, off-farm stocks are extremely low and in recent weeks domestic processors started to buy aggressively. As a result, domestic ruble prices have been rising quite noticeably, 12.5% wheat went up by around 1,000 rub/mt ($14/mt) since early April.

Hot and dry weather in the main spring wheat regions also could be a concern. After several weeks of dryness in parts of the Volga Valley, the Urals and Siberia the weather models still forecast minimum precipitation. 

The most recent SovEcon’s crop forecast is 81.7 MMT of wheat (85.9 MMT in 2020; USDA: 85 MMT). The new forecast will be released shortly.

Follow the Black Sea grain market

Get your free trial of The Sizov Report — an analytical service covering agricultural markets of Russia, Ukraine and Kazakhstan

Try for free

More Articles for You

Weather helps new Russian wheat crop, SovEcon upped the forecast

SovEcon upped the Russian wheat crop forecast on favorable weather

Russia seeds spring wheat at the highest pace in five years

Russian farmers have seeded 12.8 mln ha of spring wheat compared to USDA’s estimate of 12 mln ha

Weather models predict different precipitation for key Russian spring wheat regions

The weather has been unfriendly for Russian spring wheat so far but things could change this week.

3 reasons why Russian farmers still like wheat

As of May 13, Russian farmers have seeded 4.1 mln ha of spring wheat. The seeding is catching up with the average pace on warmer weather after late spring which delayed the planting campaign in many regions. Despite the export tax we expect the country to increase the spring wheat area. Here’s why.

Russia’s wheat prices higher, the market talks about low stocks

12.5% wheat prices in Russian deep-sea ports rose by $4 to $274/mt. The Black Sea follows the rest of the world where prices continue to rise reflecting the tightness of 2020/21 global grain S&D.

Russia’s spring wheat area is to rise this year

Russia’s spring wheat area is expected to rise this year despite export taxes and sluggish campaign start