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

Weekly round-up of Black Sea grain market – July 4

Russian wheat tax down $62; SovEcon upped 22/23 Russian wheat export estimate

Weekly round-up of Black Sea grain market – June 27

Russia could ease export tax; Ukraine and Russia starting yields

Weekly round-up of Black Sea grain market – June 20

SovEcon upped new Russian wheat crop estimate despite worsening winter wheat conditions

Weekly round-up of Black Sea grain market – June 13

Crop conditions detiorate in Black Sea; new Kremlin narrative could be a gamechanger

Weekly round-up of Black Sea grain market – June 6

Ukraine planted 4.6 mln ha of corn (+0.9 to USDA); Nikolaev grain terminal on fire

Weekly round-up of Black Sea grain market – May 30

Russian wheat planting lags by 10%, Ukrainian corn crop upped