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Prices for wheat in Russia are rising due to drought: what to expect on domestic and export markets?
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Prices for wheat in Russia are rising due to drought: what to expect on domestic and export markets?

On the domestic wheat market, prices have increased: by 300 rubles in the southern regions, by 100 rubles in the central region, by 150 rubles in the Volga region, and by 250 rubles in Siberia.

The export of Russian wheat in October has dropped to 215-217 dollars FOB due to the increase in prices for other types of wheat. The wheat export forecast is reduced to 5.35 million tons in September, with an expected 4.4-4.8 million tons in October.

1 October 2024 1 October 2024

Positive changes are occurring in the domestic wheat market. For example, prices for wheat with 12.5% protein in the south of the country have increased by 300 rubles to 15-15.2 thousand rubles per ton without VAT. In the central regions, prices have increased by 100 rubles to 13.4-13.8 thousand rubles per ton. In the Volga region, prices have increased by 150 rubles to 13.2-13.6 thousand rubles per ton. This information was provided by the analytical center "Rusagrotrans". In Siberia, prices for purchasing 4th class wheat have increased by 250 rubles to 9-10.5 thousand rubles per ton. Prices for 3rd class wheat are around 11-13 thousand rubles per ton without VAT.

Prices for 12.5% protein wheat in deep-water ports have increased by 650 rubles to 17.1-17.5 thousand rubles per ton without VAT. Prices in shallow water have risen by 800 rubles to 16 thousand rubles per ton. Analysts compared these prices with last year's figures, which were 14.65 thousand rubles per ton and 11.8 thousand rubles per ton respectively. CPT Novorossiysk prices for delivery by railway amounted to 17.35-17.55 thousand rubles per ton, which is 100 rubles less than last week.

On the export market, prices for Russian wheat with 12.5% protein for delivery in October have decreased by 0.5 dollars to 215-217 dollars per ton FOB. At the same time, the price for French wheat has increased by 3 dollars to 249 dollars per ton, American wheat has risen by 11 dollars to 259 dollars per ton, and German wheat has increased by 5 dollars to 257 dollars per ton. On the wheat futures market, US quotes initially strengthened but started to decline on Thursday due to weak data on American wheat sales. This was reported by analysts from "Rusagrotrans".

The Russian market is supported by news of ongoing drought and lagging winter crop planting in the Central European part of Russia. The situation with winter crop plantings in some regions is causing concern. According to Dmitry Ryalko, CEO of the Institute for Agrarian Market Conjunction, the situation is complex, possibly dramatic, as no rainfall is expected over the next two weeks over a large area. The situation is particularly worrying in the Saratov and Volgograd regions. Plants may not have the opportunity to break through the soil and grow to the tillering stage, he said at the "Agroinvestor: PRO Plant Growing" conference. The "SovEcon" analytical center reported last week that by the end of September, winter cereals had been sown on 8.3 million hectares, which is less than the previous year and the lowest figure since 2013. The delay is due to adverse weather conditions in the main regions for growing winter crops.

The market also received support from news of deteriorating planting conditions in Australia, where sowing work is disrupted by drought and frosts on an area of 1.2 million hectares. In Argentina, there are also planting problems due to lack of rainfall in central and northern regions.

Due to a slowdown in shipments in the second half of the month, "Rusagrotrans" analysts lowered the wheat export forecast for September to 5.35 million tons (including EAEU countries). The preliminary estimate for shipments in October is about 4.4-4.8 million tons, whereas 5.1 million tons were shipped in the same month last year. This is due to the decrease in sales by Russian exporters due to the lack of price growth on the external market.

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