Wheat prices on the Russian market, which have been declining since mid-August, are stabilizing. Over the past week, quotes have hardly changed, remaining at the level of 11–12.5 thousand rubles. per ton, which analysts explain by the revival of demand from exporters and a decrease in sales by farmers. But a noticeable increase in prices is not expected, including due to the remaining high overall supply of grain.
Wheat prices on the Russian market, which had been declining since mid-August, generally stabilized in the week of November 13–17, the Sovecon review notes. According to analysts, the average price of third-class wheat in the European part of the country increased by 50 rubles over the week, to 12.5 thousand rubles. per ton, fourth class – decreased by 50 rubles, to 11.02 thousand rubles. per ton. Over the past three months, fourth-grade wheat in the Russian Federation has fallen in price by 21%, Sovecon clarified.
Rusagrotrans, whose data is provided by the Pole.RF portal, notes an increase in average prices for third-class wheat in the south over the week by 133 rubles, to 12.13 thousand rubles. per ton, and a decrease in prices for this grain by 36 rubles, to 10.04 thousand rubles. per ton, in the center. The cost of the fourth class, according to Rusagrotrans, in the south remained at 11.56 thousand rubles. per ton, and in the central regions increased by 65 rubles, to 8.76 thousand rubles. per ton.
Sovecon director Andrey Sizov says that the market was affected by the revival of demand from exporters due to some strengthening of Russian wheat on a FOB basis in recent weeks, activation before the New Year’s lull and a reduction in sales by farmers, who partially covered the need for working capital or freed up storage capacity .
Sovecon estimates the cost of Russian wheat with 12.5 percent protein with the nearest supply at $230–236 per ton (FOB). A few weeks ago, sales were at prices less than $230 per ton, Mr. Sizov points out. In addition, as stated in the Sovecon review, the interest of exporters in the Volga region and the Center has revived in the context of the expected closure of navigation along the Volga at the end of November.
General Director of the Institute of Agricultural Market Studies Dmitry Rylko clarifies that with the arrival of a new crop on the market, prices for fodder in the center of the Russian Federation decreased, which “slightly affected the cost of fourth-grade wheat.” Feed prices have been rising in the last two weeks due to exporter demand for wheat with 10.5-11.5% protein, which is popular in almost all key foreign markets, including Southeast Asia and Turkey, except Africa, he explains.
The cost of high-milling wheat with more than 25% gluten, adds Mr. Rylko, remains at the level of 14-15 thousand rubles. per ton.
Chairman of the Board of the Union of Grain Exporters Eduard Zernin says that there has not yet been an increase in the domestic cost of wheat, but “given the stable external demand, we can count on a slight correction in purchase prices from key exporters.” Due to the increase in debt on the part of importers, the dynamics will “most likely be limited” if it is not supported by the demand of domestic consumers, the expert clarifies. The purchasing price index of the Union of Grain Exporters in deep-sea ports from November 10 to November 17 decreased from 14.46 thousand to 14.31 thousand rubles. per ton.
Andrei Sizov admits a slight increase in wheat prices on the domestic market, but does not see any prerequisites for a significant increase in prices. According to him, prices on the world market are not growing, the factor of grain supply in Russia close to a record high remains due to the high harvest and carry-over stocks, and exports with such supply are proceeding at a relatively low pace. In addition, the expert adds, rising prices will restrain the strengthening of the ruble.
Dmitry Rylko believes that in November wheat exports from Russia will be less than expected due to worsening weather; importers’ demand for wheat with 12.5 percent protein is unstable, and has even decreased at the moment. Sovecon estimates wheat exports in November at 3.9 million tons, compared to 4.3 million tons a year earlier and the monthly average of 3.5 million tons. In early November, Sovecon lowered its forecast for wheat exports this season by 0.4 million tons, to 48.8 million tons.