Russian wheat export prices have seen a downtrend recently, primarily pressured by an abundant supply in the Black Sea region. IKAR agriculture consultancy indicates a slight dip in the FOB price for 12.5% protein Russian wheat for early March delivery, quoted at $235 per ton, which is a $3 reduction from the week before. Dmitry Rylko, the head of IKAR, points out that the Black Sea’s high supply is the key factor driving this decline.
Despite the price drop, Russia’s wheat export volume has actually increased, which stands in contrast to the general price movement. As per Sovecon agriculture consultancy, the wheat price is currently fluctuating between $238 and $242 a ton FOB, reflecting a marginal decline from the previous range of $240 to $243.
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Looking into the country’s grain procurement, the Russian authorities have purchased 495,000 tons of grain for the state fund as of late January, with wheat comprising the majority at 473,000 tons. This move is part of a larger effort to accumulate up to 2 million tons, sparked by excessive supplies and stockpiles within Russia.
Export dynamics tell a story of robust activity, even though the figures dropped to 0.65 million tons of grain last week from 0.75 million tons the week prior. Wheat exports, as reported by Sovecon, accounted for 0.58 million tons of this total.
The anticipation of export quota regulations, which are set to commence on February 15, seems to be influencing current market behaviors. Traders are likely looking to fulfill their contracts ahead of these constraints, as the quota limits the export of wheat, corn, barley, and rye to 24 million tons, apportioned based on previous shipping volumes.
Moreover, Sovecon’s upward revision of Russia’s wheat harvest forecast for 2024 by 0.9 million tons to 92.2 million tons is rooted in favorable weather conditions. With winter crop areas increasing by one million hectares over the previous year, there’s cautious optimism for the upcoming season. However, Sovecon also highlights some regional risks due to expected higher than normal temperatures, which could leave the new crops vulnerable to subsequent cold snaps.
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This situation underscores the delicate balance between current supply dynamics and future uncertainties which could impact both domestic and global wheat markets.
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