Russian wheat prices climb as export demand surges amid tight supply

SovEcon reported that bids for 12.5% wheat in Russian deep-sea ports increased to 17,600-18,000 rubles per metric ton last week, compared to 17,300-17,800 rubles per metric ton the previous week.

The upward shift in prices marked the first positive change since mid-February. 

This increase was primarily fueled by a combination of factors, including a notable rise in demand from exporters and a persistent constraint on the available supply.

Concerns about low stocks 

Russia’s wheat supply is facing constraints due to a combination of factors, with relatively low stock levels being a key concern. 

As of March 1, the total wheat stocks in Russia were recorded at 11.6 million metric tons.

This figure represents a significant decrease of 34% compared to the stock levels at the same time last year.

This substantial drop in stocks indicated a tighter supply situation, which could have implications for both domestic and international wheat markets.

The Southern export regions’ stocks were 2.5 million metric tons, a 56% decrease compared to the previous year, SovEcon said.

Strong export activity

The surge in demand from traders can be attributed to the heightened export activity witnessed in recent weeks. 

Data reveals a significant increase in wheat shipments, with 400,000 metric tons exported last week, compared to 300,000 metric tons the week before. 

This upswing in exports has created a supply-demand imbalance, leading to a shortage of wheat in the market.

The situation is further exacerbated by the arrival of vessels that are unable to procure adequate quantities of wheat due to the prevailing scarcity.

Export prices dip

The price of Russian wheat exports with 12.5% protein content experienced a decline this week, with quotes dropping by $2 to settle within the $250–$254 per metric ton range (free-on-board). 

This downward adjustment aligns with a broader trend of weakening prices in the global wheat market, influenced by various factors such as fluctuating supply and demand dynamics, changes in global trade policies, and shifts in currency exchange rates. 

The decrease in Russian wheat export prices could impact trade flows and market dynamics for wheat-importing countries, potentially leading to adjustments in sourcing strategies and pricing for wheat-based products.

The strengthening of the ruble has exerted upward pressure on bidding prices, driving them to a multi-year high of $211 per metric ton. 

Ruble strength

This surge in prices can be attributed to the increased value of the ruble, which has made the commodity more expensive for foreign buyers. 

As a result, bidding prices have climbed to levels not seen in several years, reflecting the impact of the ruble’s appreciation on the market.

Last Thursday, the ruble’s value against the US dollar significantly strengthened.

The exchange rate was 84.19 rubles per US dollar, marking a substantial appreciation compared to the rate of 105.06 rubles per US dollar just a month earlier. 

The recent surge in ruble prices has had a significant impact on export margins, causing them to dip once again into negative territory.

Andrey Sizov, managing director at SovEcon, said:

Given the current level of export and ruble prices, the supply of wheat from Russia in the near term is likely to be low, which may provide some support to global prices.. 

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