Russian wheat export prices rise in less liquid market
Russian wheat export prices rose, but market liquidity is shrinking, with long-haul shipments dropping significantly. February exports are expected to be half of last year’s levels. Increased competition from Argentina and Australia, along with a low export quota of 10.6 million tons, is limiting trade. Russia’s total grain exports are projected to decline by 20% this season.
MOSCOW: Russian wheat export prices rose last week, returning to the levels of 2023/24 for the first time this season, but the market is rapidly losing liquidity and long-haul shipments have declined, analysts said.
They forecast February export volumes will halve from last year to match those of January, and noted lower export margins for wheat and sunflower oil.
Dmitry Rylko, head of the IKAR consultancy, said the price of Russian wheat with 12.5% protein for free-on-board (FOB) delivery at the end of February was up $2.50 from the previous week to $239 per metric ton, and up $6.5 to $243 for FOB delivery at the beginning of March.
“The market is growing, but at the same time, we have to realise that there are few buyers and fewer sellers. Liquidity is shrinking,” said IKAR head Dmitry Rylko.
“We see that geographically our market is shrinking very seriously. If in December, long-haul shipments, meaning to countries west of West Africa and east of Iran, were at 1.3 million tons, in January they were only 0.3 million tons, providing 75% of the total market contraction,” Rylko said.
According to Rylko, competition from Argentina and Australia played a role in the decline.
The Sovecon consultancy assessed prices for Russian wheat with the same protein content and delivery terms at between $237 and $239 per ton, compared with $235 to $238 the previous week.
From Feb. 15, a very low export quota of 10.6 million tons of wheat for the second half of the season to June 30 will be applied to the Russian market.
Weekly grain exports were estimated last week at 0.66 million tons, including 0.59 million tons of wheat. This was the same as in the previous week, when it included 0.53 million tons of wheat, Sovecon said.
The agency raised its January wheat export estimate by 0.1 million tons to 2.2 million tons, compared with 3.6 million tons a year earlier. IKAR estimates January wheat exports at 2.4 million to 2.5 million tons, down from 3.8 million tons in December, with exports in February expected to be 2.2-2.4 million tons.
Rail carrier Rusagrotrans forecasts wheat exports of 2.54 million tons in January, with February exports also expected to be half of last year’s level for this month, at 2.2-2.3 million tons. This is the lowest since the February 2020 level of 1.9 million tons, Rusagrotrans analysts said.
Russian grain exports will fall this season by one-fifth from last season’s record to 57 million tons, after the harvest was hit by bad weather, Agriculture Minister Oksana Lut said last week.
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Source : Business Recorder
