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- Stoneleigh
An abundance of Russian wheat coming to the market has been pressuring prices in recent months. UK feed wheat futures (May-23) have dropped £10.10/t since the start of the 2023 (based on yesterday’s close) and that’s despite the market being supported to some extent over the last couple of weeks.
Russian wheat continues to be competitive in international tenders and exports are continuing to leave the country. Egypt’s state grain buyer, GASC, provisionally purchased 535Kt of Russian wheat in its latest international tender, to be supplied over February and March. Russian origin for the whole amount was offered at a CIF (cost, insurance and freight) price of $322.80/t – $325.80/t.
Russian consultancy, SovEcon, have estimated wheat exports for January at 3.7Mt, significantly higher than the 1.4Mt recorded in January 2022. This takes total exports for this marketing year to date (Jul to Jan) to an estimated 26.2Mt. Currently, SovEcon have full season Russian wheat exports pegged at over 44Mt, which leaves around 18Mt to be shipped from February to June. However, the analytical firm, Interfax, has recently suggested that Russia may export between 30 to 35 million tonnes of grain during the first half of 2023, with the majority of that likely wheat.
Looking ahead, there is a lot that could happen between now and the end of this marketing year. For example, the Ukraine grain export corridor may not be renewed in March or Russia’s export tax could kick in, constraining exports in the name of ‘food security’. These will be a critical watchpoints, but as it stands now, it’s looking likely Russia will continue to supply the market with wheat.
Both SovEcon and IKAR estimate the 2023 Russian wheat crop at 86Mt and 84Mt, respectively. Recently IKAR have revised their wheat estimate down (-3Mt) as there is drought concerns in the southern parts of the country. SovEcon have maintained their forecast, but did note that dry weather is becoming a problem. What is critical to note, although down on the year, the size of next season’s crop remains historically high.
On the point of weather, rains are expected in the North Caucasus and southern regions of Russia over the next week, which will improve some soil moisture concerns.
To conclude, this season’s record Russian wheat crop has the potential to continue weighing on the whole grain complex, if the export pace remains. Looking to next season and Russia are expecting another large production year, albeit not as big as 2022. Russia’s wheat exports this season, and the size of next year’s crop will likely continue to be a macro sentiment setter for global and domestic wheat markets.
Today's Grain Market Daily is now published - Russian wheat to continue to weigh on the market?
For information on price direction make sure to subscribe to Grain Market Daily and Market Report from our team.
Russian wheat continues to be competitive in international tenders and exports are continuing to leave the country. Egypt’s state grain buyer, GASC, provisionally purchased 535Kt of Russian wheat in its latest international tender, to be supplied over February and March. Russian origin for the whole amount was offered at a CIF (cost, insurance and freight) price of $322.80/t – $325.80/t.
Russian consultancy, SovEcon, have estimated wheat exports for January at 3.7Mt, significantly higher than the 1.4Mt recorded in January 2022. This takes total exports for this marketing year to date (Jul to Jan) to an estimated 26.2Mt. Currently, SovEcon have full season Russian wheat exports pegged at over 44Mt, which leaves around 18Mt to be shipped from February to June. However, the analytical firm, Interfax, has recently suggested that Russia may export between 30 to 35 million tonnes of grain during the first half of 2023, with the majority of that likely wheat.
Looking ahead, there is a lot that could happen between now and the end of this marketing year. For example, the Ukraine grain export corridor may not be renewed in March or Russia’s export tax could kick in, constraining exports in the name of ‘food security’. These will be a critical watchpoints, but as it stands now, it’s looking likely Russia will continue to supply the market with wheat.
What can the future hold for Russian wheat?
Currently, plantings for harvest 2023 are also a critical watchpoint. What we do know for the future is that Russia provisionally still has a very large wheat crop coming, which has the potential to continue weighing on grain markets as we head into the 2023/24 marketing year.
Both SovEcon and IKAR estimate the 2023 Russian wheat crop at 86Mt and 84Mt, respectively. Recently IKAR have revised their wheat estimate down (-3Mt) as there is drought concerns in the southern parts of the country. SovEcon have maintained their forecast, but did note that dry weather is becoming a problem. What is critical to note, although down on the year, the size of next season’s crop remains historically high.
On the point of weather, rains are expected in the North Caucasus and southern regions of Russia over the next week, which will improve some soil moisture concerns.
To conclude, this season’s record Russian wheat crop has the potential to continue weighing on the whole grain complex, if the export pace remains. Looking to next season and Russia are expecting another large production year, albeit not as big as 2022. Russia’s wheat exports this season, and the size of next year’s crop will likely continue to be a macro sentiment setter for global and domestic wheat markets.
Today's Grain Market Daily is now published - Russian wheat to continue to weigh on the market?
For information on price direction make sure to subscribe to Grain Market Daily and Market Report from our team.