Russian wheat price hits three-months high amid drought and supply cuts
Wheat prices jumped 4.3% recently, reaching their highest level since June 26, 2024, with FOB Russia’s 12.5% protein wheat at $228.50 per metric ton. Drought in Russia has significantly affected production, with expected 2024-2025 harvests at 82.1 million metric tons and exports of 47 million metric tons, driving increased competition for buyers like Egypt and Ukraine.
The wheat price rose as much as 4.3% in just the last two weeks alone, and is now the highest price since June 26, 2024. As of Oct. 3, Platts, part of S&P Global Commodity Insights, assessed the price of FOB Russia’s 12.5% protein content at $228.50 per metric ton for the end of October to the first half of November loading.
More Russian regions — Oryol most recently — declared an emergency on extreme drought conditions. This followed after multiple regions were already hit by frosts and more droughts since early May, which cut down the Russian wheat 2024-2025 production and as a result the export potential for the season. Russia is expected to harvest 82.1 million metric tons of wheat in 2024-2025 and set to export 47 MMt, according to Platts data.
Traders said the drought is hindering wheat sales from Russian farmers, leading to dwindling liquidity, which is also likely to impact the next winter planting for the 2025-2026 wheat crop.
“The market is only going up,” a Russian seller said.
“This is a dangerous situation for the crop’s next season. There hasn’t been any rain,” another Russian seller said.
Russian exporters are under pressure to reduce shipments, prompting calls for export restrictions. The Russian Grain Union intends to appeal to the Russian agriculture ministry with a proposal to review the methodology for distributing the export quota for the second half of the season. The grain exports from Russia “exceeds reasonable parameters based on the export potential of the season and demand on the world,” the union said on Telegram on Oct. 2.
Egypt continued to be a top buyer of Russian wheat, buying 1.4 MMt in September. Egyptian buyers are increasingly focused on Russian prices, which are considered more competitive than those of Ukrainian wheat. A much higher protein 12.5% Russian wheat was priced at $236/t CIF Alexandria port, compared with Ukraine’s 11.5% at $245/t as of Oct 2. Ukraine has so far exported 6 MMt of wheat this season, with a total of 2.18 MMt in September, with the top customers being Indonesia, Vietnam, and the Netherlands.
“Buyers do not prefer Ukrainian [wheat] as it is more expensive,” a local buyer said.
“Also Asia and the rest of Middle East North Africa region is looking on Russia,” a seller of Ukrainian wheat said. Ukraine’s 11.5% wheat saw a similar increase, rising 2% over two weeks, reaching it highest level since June 17, 2024, Platts data showed.
Egypt’s state board, GASC, is actively seeking to secure wheat at reasonable prices, while Saudi Arabia’s GFSA aims to purchase at least 300,000 t of wheat for December 2024-January 2025 on Oct. 4. Additionally, Morocco is expected to buy more Russian wheat than French this season, as France, which used to be its primary supplier, is expected to export significantly less due to crop damage from rain.
In Turkey, millers are awaiting an announcement from the ministry on whether imports are allowed to resume after Oct. 15. Turkey banned imports of wheat from June to mid-October to protect local production. Buyers said they expect the ban to be postponed until the end of the year on high local wheat stocks. However, most millers have been pushing for the ban to be lifted amid quality concerns of the domestic wheat.
“They have the option of extending till the end of the year,” a miller said.
“Local wheat prices are high and are not supporting wheat flour exports positively,” another miller said.
Elsewhere, the Romanian and Bulgarian wheat markets have been trying to compete with Russian wheat. The FOB CVB 12.5% and 11.5% have risen 6.7% in the last two weeks and the highest price since June 13, 2024.
Traders said they expect the spread between the two origins to narrow in the coming weeks. The spread is currently around $20/t for the 12.5% protein.
“We are too expensive,” a Romanian-based trader said. “But now that Russia is out, our chances will improve.”
Romanian farmers tried to capture the higher prices of wheat. “I sold some, still at small prices,” a Romania-based farmer said.
“Exporters are willing to sell, but to whom?,” one Romanian exporter said. “There are not too many sales.”
