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Russian wheat export prices up with global benchmarks

Reuters, 11.07.18

Russian wheat export prices rose slightly last week as wheat futures in Chicago jumped on concerns about lower French production, analysts said on Monday. Strong demand from major customers also supported Russian wheat. The state buyer of Egypt, the world's largest wheat importer and largest buyer of Russian wheat, bought 120,000 tonnes of Russian wheat in a tender last week.

Black Sea prices for the new crop of Russian wheat were at $200 a tonne on a free on board (FOB) basis at the end of last week, up $1 from a week earlier, the IKAR agriculture consultancy said in a note. SovEcon, another Moscow-based consultancy, pegged wheat and barley prices at $197 per tonne and $189.5 per tonne, respectively.

As of June 27, Russia had exported 52 million tonnes of grain since the start of the 2017/18 season on July 1, up 48 percent year on year, including 40.2 million tonnes of wheat, the agriculture ministry said. SovEcon estimates Russia's June exports of wheat, barley and maize (corn) at 3.1 million tonnes.

Late last week it downgraded its forecast for Russia's 2018 wheat crop to 72.5 million tonnes from 73.1 million tonnes due to cold and rainy weather in Siberia. It could downgrade the forecast further if dry weather persists in the European part of Russia, it said, adding that the spring wheat sowing campaign ended at the lowest area in at least 50 years.

It downgraded its estimate for 2018/19 grain exports to 47.2 million tonnes, including 36.9 million tonnes of wheat, 4.4 million tonnes of barley and 4.0 million tonnes of maize. The grain harvesting has started in Russia but the agriculture ministry has yet to disclose the combined data. According to data from the Krasnodar, Rostov and Stavropol regions, yields of winter wheat are down, SovEcon said.

The weather is still dry in Russia's southern regions, which is good for harvesting but is posing risks to yields of crops which will arrive later. Rains have come to parts of Russia's central regions, improving conditions for sowing, but a significant part of the region is still dry, causing concern for grain yields.

The dry weather also persists in the Volga region. Warm and dry weather has also come to Siberia and it favours sowings there which have enough moisture in the soil. This week, rains are expected to come to a significant part of the European part of Russia and improve conditions for spring and winter wheat, SovEcon added.

Domestic prices for third-class wheat were unchanged at 9,175 roubles ($145) a tonne in the European part of Russia on an ex-works basis, according to SovEcon. The government continues selling up to 500,000 tonnes of grain from 2008-2016 crops from its 4 million tonne grain stockpile to free up storage space and to reduce budget spending on servicing the stock.

It is offering the grain in small batches in the hope that buyers will then export it. It has sold 87,885 tonnes of grain in several tenders since the start of this process on June 20. Sunflower seed prices fell by 50 roubles to 21,350 roubles a tonne, SovEcon said. Domestic sunflower oil prices fell 175 roubles to 45,075 roubles, while export oil prices were flat at $715. IKAR's white sugar price index for southern Russia was $497.71 a tonne, down from $501.65 a week earlier.

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