Russian wheat knocks down global prices as grain stockpiles mount
CHICAGO/SINGAPORE, March 13 (Reuters) – Russia is flooding theglobal marketwith cheap wheat as the world’s No. 1 supplier draws down inventories ahead of an expected bumper harvest, easing food inflation for importers but intensifying competition for rival exporters.
Prices of U.S. Wv1 and European wheat BL2K4 have dropped to their lowest in about 3-1/2 years, weighed down by Russian grain flows, which have prompted China to cancel recent purchases from the United States.
Global cereal supplies are shifting to surplus from the shortages of the past several years caused by unfavorable weather, the coronavirus pandemic and the Russia-Ukraine war.
“Russia still has large inventories which need to be sold to free up space for the new harvest, which is expected to be big,” said Matt Ammermann, vice president of the Eastern Europe and Black Sea region for brokerage StoneX.
Russia is projected to export a record 51 million metric tons of wheat in the crop year that ends on May 31, up from 47.5 million a year ago, the U.S. Department of Agriculture (USDA) says.
It is forecast to export 4.5 million to 4.8 million tons of wheat in March, which would be bearish for global prices, Ammermann added.
Refinitiv data shows benchmark Russian wheat export prices slipped below $200 a metric ton ($5.44 per bushel) this week for the first time since August 2020, marking the lowest early-March price since 2017.
“What is more important is what is going to happen to prices going forward,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.
“When you look at the global production prospects in the second half of the year, there is going to be more supply. Crops across the northern hemisphere are doing very well. Prices will come under more pressure in the near term.
Read more: https://www.nasdaq.com/articles/russian-wheat-knocks-down-global-prices-as-grain-stockpiles-mount
