Wheat prices sharply raised in Russia

According to the monitoring results of the SovEcon analytical center, over the past week, the prices for Russian wheat (with a protein content of 12.5%) increased to $301 per ton (on FOB terms through deep-sea ports), thereby reaching a maximum level since April this year.

There are several reasons for these changes. Firstly, the deterioration of the prospects for the new crop in Russia and Canada played a certain role. This resulted in a rise in prices by more than $50 per ton since July this year. Secondly, there was an increase in domestic prices and volatility in export duty rates.

According to the report, since June, the prospects for a new wheat crop in the Northern Hemisphere began to sharply decline due to dry and hot weather. An equally important factor was the reduction in sown areas under winter crops, which became known only in July.

In turn, the cost of Russian wheat was supported by the strengthening of ruble prices, which rocketed by about 3 thousand rubles per ton since mid-July.

Summing up, it will be important to note the uncertainty before the further rise in prices for Russian wheat. One should take into account that prices for wheat from other regions have dropped significantly in recent weeks, and the competitiveness of Russian grain is also falling. The SovEcon’s experts expect pressure on the domestic market based on the increase in the export duties.

According to the information of the Ministry of Agriculture of Russia, the export of grain crops in the 2020-2021 agricultural year exceeded 48 million tons, of which wheat is 37.5 million tons. The export potential in the current season is preliminarily estimated at 51 million tons of grain.

Source: Finmarket