Source: Ukragroconsult (Ukraine)
The current global market dynamics are posing challenges to Russian wheat’s strong position. Consequently, factors like elevated export prices and a strengthening ruble are significantly affecting Russian wheat competitiveness. The competition from other origins is intensifying.
Factors Impacting Russian Wheat Export Performance
The price of Russian wheat with 12.5% protein has increased substantially. It’s now approximately $240-$243 per ton FOB. This marks an increase of $5-$8 compared to the previous week’s prices. Meanwhile, competitors offer more attractive options. For instance, French wheat with the same protein content is available at around $233-$235 per ton FOB. So, this makes it a more appealing choice for buyers. Romanian wheat is even cheaper at $230 per ton FOB. Besides, the ruble’s strengthening is making Russian exports more expensive.
Therefore, the export pace from Russia is slowing down. The Russian Ministry of Agriculture reports that as of May 15, 2024, Russia exported 47.6 million tons of grain. This includes 39.3 million tons of wheat. However, this is still a substantial volume. Last season, by the same date, the country exported 56.4 million tons, including 47 million tons of wheat. Thus, the figures demonstrate a clear decrease.
Alternatives Gaining Traction
Presently, importers are actively exploring alternatives. French and Romanian wheat are becoming increasingly popular. In addition to price, logistical advantages and established trade relationships are contributing factors. Egypt, a major wheat importer, has shown interest in diversifying its sources. They’ve already secured significant volumes from other Black Sea countries and the European Union.
Furthermore, the weather conditions in key wheat-producing regions are also influencing the market. Favorable forecasts for harvests in Europe and North America are easing concerns about global supply. Therefore, buyers are less reliant on Russian wheat. In fact, Ukraine, despite ongoing challenges, continues to export wheat. This adds to the competitive pressure.
In conclusion, several factors are converging to weaken Russian wheat competitiveness. Higher prices, a strong ruble, and abundant supply from rival countries are reshaping the global wheat trade. Though Russia remains a major exporter, it faces significant hurdles in maintaining its market share.