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Russia Expands Global Reach of Wheat Sales With Surge in Sudan

Bloomberg, 23.01.18

(Bloomberg) -- Russian wheat exports are expanding further across the globe as the world’s biggest shipper edges out competitors.

In the latest example, its shipments to Sudan have jumped 87 percent so far this season, turning the African country into the seventh-largest customer for Russian wheat, Institute for Agricultural Market Studies figures show.

Sudan imported no Russian wheat until 2014, when millers decided the grain met their quality requirements, according to the country’s embassy in Moscow.

Such shifts among consumers, along with a third straight bumper crop and a weakened ruble, have allowed Russia to send wheat grown in the Black Sea region to markets as far away as Indonesia. That’s cut into the market shares of traditional suppliers including the U.S., the European Union and Australia.

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“Competitiveness of Black Sea origin is the main reason why Russian wheat has displaced Aussie origin into Sudan,” said Tom Basnett, general manager at commodity consultant Market Check in Sydney. “Australia has exported nothing over the last few years into Sudan, and will no doubt do nothing this year.”

Russia was Sudan’s biggest supplier in 2016-17, followed by the EU, according to Market Check. Australia held the top spot as recently as 2012-13, shipping more than 800,000 metric tons, it said. Since this season began in July through December, Sudan already bought 821,000 tons from Russia, IKAR data show.

The African country is set to be the continent’s fifth-largest importer of wheat this season, data compiled by the U.S. Department Agriculture show. Some of the flour made from Sudan’s imported wheat is smuggled across the border to landlocked African nations, according to its Moscow embassy.

Russia may benefit further in Sudan from changes in government policy.

The African nation ended a cap on bread prices this year and will pay subsidies to 800,000 families instead, encouraging millers to boost imports, according to Nadir Yousif, Sudan’s ambassador in Russia.

Russian Wheat Exports Increased 35% y/y This Season to Jan. 17

“Now that prices are liberated, we expect Russian businesses are aggressive enough to give good offers to the Sudanese market so we can get more than 1 million tons,” Yousif said. “We can speak to the tune of 1.5 million tons.”

The unit of Agricultural Bank of Sudan responsible for much of the nation’s wheat purchases and retaining strategic inventories currently buys a total of about 1 million tons of wheat a year, mainly from Russia, he said.

A ban on flour imports is also seen spurring purchases of wheat, Yousif said.

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