Source: Oleoscope (Russia)
SovEcon predicts that Russian wheat exports for March will range between 1.4 and 1.8 million tons, significantly lower than last year’s 4.8 million tons and the five-year average of 3.3 million tons. The decline in exports is expected to be threefold compared to the previous year, driven by unfavorable margins for exporters and the diminished competitiveness of Russian wheat.
The ongoing low margins for exporting Russian wheat are the primary barrier to higher export volumes. Currently, exporters are operating at a loss, contrasted with a margin of approximately $10 per ton in November.
Last week, the purchase costs for wheat with a protein content of 12.5% at deep-water ports remained between 17,500 and 18,000 rubles per ton. Although exporters are attempting to lower purchase prices, farmers are hesitant to sell. Some traders temporarily increased purchase prices during the week to quickly acquire more grain for incoming ships.
Farmers in Russia are delaying the sale of wheat as they anticipate better prices. Their stock levels are relatively low, with Rosstat reporting that as of February 1, agricultural organizations (excluding smaller farms) had wheat stocks of 13.7 million tons, which marks a 32% decrease from last year and a 7% deficit compared to the average.
The price quotes for Russian wheat with a 12.5% protein content fell by $2 to $246-250 per ton FOB due to increased competition from other suppliers. This price drop is the first observed since late January.
In February, SovEcon anticipated Russian wheat exports for the 2024/25 season to be 42.2 million tons, while the US Department of Agriculture’s estimate is higher at 45.5 million tons. It is anticipated that the forthcoming WASDE report will revise the export forecast downward.
Overall, analysts expect a stable trend in the domestic grain market in the near term, with low export demand balanced by equally low supply. Igor Pavensky, the head of Rusagrotrans’s analytical center, previously suggested that world wheat prices could rise to between $250 and $270 per ton, up from the current $245 to $247. This potential increase in prices is expected to be influenced by adverse weather conditions affecting the current winter crop yield.