Russian wheat is becoming more expensive on the world market

Growing demand and concerns about dry weather in the Black Sea region could help strengthen prices for Russian wheat on world markets. Over the past two weeks, the price of wheat from the Russian Federation has increased by $6, to $204–205 per ton. The further dynamics of quotes may be affected by the escalation of the situation in the Black Sea, but huge grain reserves are likely to restrain a significant rise in prices.

Prices for Russian wheat with 12.5% ​​protein for export in April increased by $3 in the week to March 22, to $204 per ton (FOB), Rusagrotrans analysts calculated. Prices are rising for the second week in a row and have increased by $6 per ton since March 8, the company added. They attribute the dynamics, among other things, to the growth in demand for Russian wheat as the most competitive in price. Wheat from both France and Germany, according to analysts, rose in price by $5 over the week, to $214 and $229 per ton, respectively, while American wheat fell by $2, to $227 per ton.

According to estimates by Dmitry Rylko, General Director of the Institute for Agricultural Market Studies, the average cost of Russian wheat with 12.5% ​​protein increased by $2–2.5 over the week, to $204.5 per ton (FOB). Dry weather in the Black Sea region, which is forecast to persist for the coming weeks, is already causing concern about the winter wheat harvest, the expert notes.

According to Sovecon, average prices for Russian wheat with 12.5% ​​protein increased over the week from $201–204 per ton to $202–205 per ton amid strengthening quotes on world exchanges. Analysts attribute the growth of futures on the French stock exchange to the closing of short positions of funds, as well as reports of missile attacks in the area of ​​the port in Odessa.

Purchasing prices for Russian wheat with 12.5% ​​protein in deep-sea ports increased from 12.3–12.7 thousand rubles over the week. up to 12.6–12.7 thousand rubles. per ton, calculated at Sovecon. According to Dmitry Rylko, average purchase prices for wheat in Novorossiysk have strengthened to 12.8 thousand rubles. per ton when delivered by road and over 13 thousand rubles. per ton for deliveries by rail due to the need of exporters for additional supply. With a purchase price of 12.5 thousand rubles. Companies can no longer produce large volumes per ton, the expert points out. The purchasing price index of the Union of Grain Exporters in deep-sea ports as of March 22 was 12.99 thousand rubles. per ton.

As Sovecon notes, the situation around the second wheat exporter from Russia, Trade House Rif, may worry some buyers and affect world prices. On Friday, Rosselkhoznadzor reported that since the beginning of 2024, the Rif Trade House has identified non-compliance with the requirements of importing countries in 81% of export grain shipments. The service also reported cases of absence or violations in shipping documents. The Reef Trade House, Shopper’s wrote, indicated that claims arose against grain shipments of 400 thousand tons on 35 ships ready for shipment. The company emphasized that they pay special attention to the quality of grain and this situation arose for the first time in 20 years. Another Kommersant interlocutor also speaks about the nervousness of market participants due to reports of problems at the Reef Trade House.

Director of Sovecon Andrey Sizov notes that the risks of escalation in the Black Sea in connection with military actions of the Russian Federation and Ukraine, including after the terrorist attack in Moscow at Crocus City Hall, may return to the focus of grain market participants and affect the dynamics of world prices . In addition to concerns about dry weather in southern Russia, there are risks regarding the new harvest of French wheat, he points out. Dmitry Rylko still considers the prerequisites for a further increase in world prices for Russian wheat to be “modest”. According to him, in the Russian Federation, as of the beginning of March 2024, agricultural producers still have record reserves, European farmers also have large stocks, and other possible topics “so far sound too vague to influence the market.”

According to Sovecon, Russia can export 5 million tons of wheat in March, which will be a record figure for this month. Based on the results of this season, Sovecon estimates Russian grain exports at 63.8 million tons, including 48.6 million tons of wheat. Andrei Sizov says that the forecast is now being revised upward.

Anatoly Kostyrev