Market Dynamics: Analyzing the Shifts in Wheat Pricing
Export prices for Russian wheat, boasting 12.5% protein content, witnessed a notable decline last week, dropping by $9.5/tonne to reach the range of $199-$202/tonne FOB. This downturn, as highlighted by SovEcon experts’ price monitoring, marks the lowest level since August 2020, attributed to a combination of abundant supply and perceptions of weakened demand in the market.
Insights from Analysts
Analysts emphasize the surge in wheat sales by Russian exporters, with contracts totaling 2.8 million tonnes as of March 12, a significant increase from 1.9 million tonnes recorded a month earlier. The momentum in sales coincides with a downturn in domestic wheat prices within Russia, enabling traders to adjust their offerings with lower FOB prices. Prices for 12.5% protein wheat have retreated from €110/tonne in mid-December to €101/tonne.
Market Competitiveness and Outlook
Russian suppliers have strategically reduced prices in the export market to uphold the competitiveness of their grain amidst global dynamics. Currently, Russian wheat stands as a more attractive option compared to European wheat, with a notable price differential. The spread between French and Russian wheat sits at approximately $8/tonne, contrasting with a negligible gap at the end of January.
Experts cautiously assess the market, suggesting that while further reductions in FOB prices for Russian wheat are not anticipated, the current competitive position provides stability. The evolving landscape underscores the resilience and adaptability of Russian wheat exporters in navigating complex market conditions, poised to capitalize on opportunities and sustain momentum in the global grain trade arena.