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IKAR in Mass Media

Price gap between Russian wheat grades to stay high as protein drops

22 июля 2022 года

Poor weather over parts of Russia's main producing regions is likely to mean that the supply of higher protein wheat will remain in relatively tight supply - supporting an increased price gap between quality milling wheats and lower quality grades, trade sources have told Agricensus.

Russia is on course to deliver its biggest ever wheat crop, but higher yields and rains over some of the main Russian producing regions mean the crop currently being harvested is showing more 11.5% or feed grades were harvested so far compared to last year.

The price gap between the 12.5%, 11.5%, and feed wheat grades have been increasing over the last week with a gap of almost $16-17/mt seen between 11.5% and 12.5% grades in coaster-sized CIF Marmara trades last week, but offers on a deep sea port basis have also widened to show the same $17/mt differential.

Currently, the lowest offer for 12.5% protein level wheat is shown in the market at $360/mt FOB, compared to 11.5% offers heard at $343/mt FOB.

“Yes, the protein has dropped, but from a very high-level last year, so it's not that bad yet. But now we are waiting for the results of widespread rains, which can change the picture,” Dmitry Rylko the General Director of analytical agency Ikar told Agricensus.

“It is not yet known, but with other things being equal, the quality will be below average, of course, as is usually the case with high yields,” Andrey Sizov, Managing Director of analytical agency Sovecon said.

The bulk of the Russian wheat crop usually reaches 12.5% wheat, and last year dry and hot weather conditions brought a bigger amount of even higher protein wheats.

That meant that, at some points, higher 13.5% protein wheat was offered at the same level as 12.5%, while 11.5% and feed wheat offers were almost absent through the marketing year.

“So far there are no yet reports from the Center for Disease Control and Prevention, but there is a lot of feed and lower protein. I think 12.5% will be enough, in the end, it is just that there would be a high premium for quality this year. In the past it was almost non-existent,” a third source said.

So far, Russia has harvested 22 million mt from 5.1 million hectares by July 18, which accounts for 17.4% of the planted area.

The yield has been on the increase since the harvest started and currently stands at 4.32 mt/ha, 25% higher year on year.

The estimates for the current wheat crop production stand at anywhere from 87 to 90 million mt, while USDA is still at 81 million mt.

The previous Russian record crop was 87.8 million mt harvested in the 2017/18 marketing year, when wheat was planted on 27.3 million ha and the average yield reached 3.21 mt/ha.

https://agricensus.com/

Source: agricensus.com  |  #grain   |  Comments: 0   Views: 2

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