Russian wheat export prices continued to decline last week amid oversupply pressure in the Black Sea region, but export volumes have gone up, analysts said.

The price of 12.5% protein Russian wheat scheduled for free-on-board (FOB) delivery in the first half of March was $235 per metric ton, down $3 from the previous week, the IKAR agriculture consultancy reported.

“Underlying all this (decline) is the high supply in the Black Sea region,” says IKAR head Dmitry Rylko.

The Sovecon agriculture consultancy pegged the same class of wheat at $238-242 a ton FOB compared to last $240-243 a week ago.

As of Jan. 26, Russia purchased 495,000 tons of grain, including 473,000 tons of wheat, into the state fund. The authorities planned to buy a total of up to 2 million tons of grain, starting from the end of December 2023, amid high supply and stockpiles in the country.

Russia exported 0.65 million tons of grain last week, down from 0.75 million tons the previous week. The exports included 0.58 million tons of wheat (0.64 million tons a week ago), Sovecon wrote, citing port data.

SovEcon expects that in January wheat export will amount 3.6 million tons versus 3.9 million tons a year ago, Sovecon wrote.

At the same time, Sovecon analysts noted some gradually recovering purchases on the domestic market by exporters, primarily in “non-southern” regions. In the south demand remains modest while supply is high.

“The grain export quota kicks in on February 15 and we assume that some traders want to execute their export contracts before that,” Sovecon said in the weekly note.

The quota is set at 24 million tons for wheat, corn, barley, and rye without breakdown for individual crops. It is distributed among traders based on the share of their shipments in total exports in July-December 2023.

Sovecon last week said it raised its forecast for the Russian wheat harvest in 2024 by 0.9 million tons to 92.2 million tons due to favourable weather conditions.

In preparation for spring field work, the Ministry of Agriculture reported last week that the area of winter crops for the 2024 harvest amounted to 20 million hectares, one million hectares more than a year earlier.

“Temperatures are expected to be noticeably higher than normal in all regions. In early February we could see maximum temperatures above 10C (50F) in the South. This somewhat increases the risks for the new crop as it could be vulnerable to a potential cold snap later,” Sovecon warned.
Source: Reuters (Reporting by Olga Popova; Editing by David Evans)