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IKAR in Mass Media

Russian wheat exports 'too slow' to meet lofty expectations

31 августа 2017 года

Russia's wheat exports have begun the season too slowly to reach the heady levels expected of them, Agritel cautioned, even as the country strengthened its grip on orders by top importer Egypt.

Russia's grain exports have started 2017-18, which began last month, a little faster than last season, reaching 5.7m tonnes as of August 21.

Last year, the total for the whole of July and August was 5.95m tonnes.

However, the pace of exports "seems weak compared to the country's export availabilities", said Agritel, with Russia expecting, another, record grain harvest.

'Staying too slow'

For wheat in particular – for which shipments reached 512,000 tonnes last week - the "export pace is staying too slow" for shipments to reach the 31.5m-tonne figure that the US Department of Agriculture, whose data set world benchmarks, has forecasts for the season.

Exports at that level would make Russia the top wheat exporter for the first time, exceeding the 29.5m tonnes expected for the EU, on USDA estimates.

The International Grains Council sees Russia's wheat exports this season hitting 32.1m tonnes, ahead of an EU forecast of 29.9m tonnes.

Late harvest

The relatively slow start to 2017-18, with exports running well behind the more than 600,000 tonnes a week needed to meet the USDA target, reflects in part a late harvest, which delayed the availability of grain for shipment, Agritel said.

Russia's wheat exports in July, at 1.40m tonnes, fell 9.9% year on year.

However, there are also worries over the ability of Russia's infrastructure to cope with extra volumes.

Agritel analyst Guatier Maupu told Agrimoney.com: "There could be a logistical problem in Russia, depending weather over the winter," which offers a particular test for the country's transport network, given the potential for poor weather.

Wheat price impact

Traders at major commodities house, with substantial interests in Russia, said that "if it is now going to be standard practice for Russia to produce in excess of 75m tonnes of wheat [a year] then they will need to invest in infrastructure in order to take their product to the market".

This factor is proving a key dynamic pricing, if the extent of Russian wheat output, estimated at more than 80m tonnes this year, will not be reflected, for now, in the boost to shipments that was initially expected.

"Now the market… appreciates the Russian logistical limits, there is some tentative support" for wheat prices, the commodities house said.

Egyptian order

The comments come as Russia was celebrating another large wheat order from Gasc, the grain authority for Egypt, on Tuesday at tender of 235,000 tonnes, with a further 60,000 tonnes purchased from Ukraine.

The order takes to 1.96m tonnes the volume of wheat that Gasc has ordered from Russia for delivery this season, out of a total of 2.91m tonnes, with the balance bought from Romania and Ukraine, and with one cargo of French grain purchased.

Russia won its order with offers as low as $186 a tonne, excluding freight, compared with a cheapest French offer at $195.69 a tonne, from Glencore.

Romanian offers, at $199 a tonne or more, were also well out of the running - although traders said that the country's exporters are reluctant to seek Egyptian business, after a threat to reject a cargo of Romanian wheat for levels of contamination with poppy seeds.

French vs Russian prices

Indeed, Gasc anyway, despite the size of its demand, pays a premium for its wheat thanks to the level of bureaucracy needed to meet its orders, and the risk of cargo rejection, Agritel analyst Alexandre Boys said.

The prices that Gasc paid for Russian wheat were above levels of $180-182 a tonne reported by Ikar and SovEcon for supplies with 12.5% protein at Black Sea ports.

Mr Boys added that wheat from French exporters, who are currently focused on seasonal orders from key buyers such as Algeria, would "not keep the high prices compared with Russia" far into the autumn, with prices expected to be more comparable come October-November.

The average price of $187 a tonne that Gasc paid for its wheat on Tuesday was the lowest yet for a tender in 2017, reflecting the pullback in international values prompted by increasing expectations for Russian output.

http://agrimoney.com/

Source: agrimoney.com  |  #grain   |  Comments: 0   Views: 68

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