After three months of decline, the Russian wheat market bottomed out, it happened against the background of demand growth and supply reduction, as follows from the report of SovEcon.
Thus, last week prices for wheat of 3 class (with protein over 13%) increased by 50 rubles, up to 12,500 rubles or €130 per ton. Wheat of the 4th class (protein 12-12.5%), on the contrary, fell in price by 50 rubles, to 11,025 rubles or €115 per ton. Prior to that, prices had been falling since mid-August, having lost 12% and 22% respectively over this period.
Increasing Demand – Decreasing Supply
“Against the background of increasing demand and decreasing supply, the market has finally reached the bottom. However, this does not mean that stabilization will be followed by a sharp rise in quotations,” – pointed out SovEcon.
They also emphasized that the supply of wheat is decreasing amid the completion of harvesting. Farmers have covered their needs in working capital and are mainly engaged in harvesting late crops and sowing winter crops.
At the same time, domestic sales of Russian wheat have intensified in the Center and Volga regions. A significant part of buyers are flour mills. In addition, the demand for the grain crop from exporters is also growing against the backdrop of a recovery in the pace of sales abroad.
“The volume of concluded contracts for the sale of wheat on November 21 amounted to 2.8 million tons against 2 million tons a month earlier” – added SovEcon.