In anticipation of a forthcoming record harvest, the Russian Federation is accelerating its exports of wheat, aiming to diminish stocks and stabilize prices globally. As the world’s leading grain exporter, Russia’s move is expected to alleviate food inflation in importing nations, although it intensifies competition among exporters. Consequently, European and American wheat prices plummeted to a 3.5-year low, while China retracted several purchase agreements.
Experts from StoneX project that the Russian Federation could export between 4.5 to 4.8 million tons of wheat in March, exerting further pressure on global prices. This week, Russian wheat export prices dipped below $200 per ton or €183,85 per ton for the first time since August 2020, marking the lowest March price since 2017.
According to SovEcon monitoring, prices for Russian wheat with a 12.5% protein content declined by $9.5 per ton or €8,73 per ton last week, settling at $199-202(€182-185) per ton FOB. Similarly, French flour wheat prices with an 11% protein content dropped from $240 per ton or €220 per ton at the end of January to $209 per ton or €192,13 per ton.
Experts anticipate a continued downward trend in world prices as favorable harvest conditions prevail in the Northern Hemisphere. Despite reduced sowing areas, moisture reserves and the condition of winter wheat crops in major cultivating regions of the USA, Europe, Ukraine, and Russia surpass last year’s levels. However, Ukraine foresees a 14.5% decrease in wheat harvest compared to last year, reaching a 12-year low of 20 million tons, according to UZA’s forecast.
Wheat futures witnessed a decline, with May futures dropping across various markets:
- Soft winter SRW wheat in Chicago fell by 0.6% to $200 per ton.
- Hard winter HRW wheat in Kansas City decreased by 1.7% to $215.9 per ton.
- Hard spring HRS-wheat in Minneapolis saw a decline of 1.3% to $243.8 per ton.
- Wheat futures on Paris Euronext dropped by 1% to €194.75 per ton or $211.7 per ton.
In Ukraine, purchase prices for food wheat rose during the week to $159-162 per ton while fodder wheat prices increased by $4-5 per ton to $145-148 with delivery to Black Sea ports. This rise is attributed to active exports and restrained sales by manufacturers.
Export statistics reveal a notable surge in Ukrainian wheat exports, which escalated by 86% to 989,000 tons from March 1-13 compared to the same period in 2023, reaching a total of 12.76 million tons for the season, outpacing last year’s pace by 7.5%.
Ukrainian wheat maintains its position as the most competitively priced on the world market, and the recent increase in the dollar exchange rate is poised to further bolster hryvnia purchase prices, thereby boosting supply.
Amidst these developments, representatives of various political factions in the European Parliament are advocating for swift sanctions on agricultural products from the Russian Federation and Belarus. This comes in response to Ukraine’s persuasive argument that an embargo on trade with Russia could mitigate low world prices and expedite the cessation of conflict.
Source:GrainTrade