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Prices for Russian wheat fell to $218-224/ton FOB last week, according to the analytical center "SovEcon". According to the center, these are the lowest figures since September 2020. The decline in wheat prices is occurring in the conditions of an unfavorable situation in the global market and weakening state price controls. The decrease in international wheat prices became a preliminary condition for reducing Russian export prices. French wheat with 11% protein decreased to $224/ton FOB by mid-February, which is $21 lower than at the beginning of the year.
An additional factor contributing to the reduction of prices for Russian wheat could have been the revision of the minimum recommended price by the Russian Ministry of Agriculture. This factor was noted by analysts after the Egyptian GASC tender, where all Russian bids were submitted at a price of $245/ton FOB. The reduction in prices for Russian wheat has led to an increase in the volume of sales, with contracts for the sale of wheat reaching 2.8 million tons by February 19, compared to 1.9 million tons in the previous month.
Dmitry Rylko, the Director General of the Institute for Agricultural Market Conjunction, notes that periods of such significant price reductions, as in recent weeks, usually indicate a lack of contracts. As a result, the price of a ton of wheat has dropped to about $215 FOB, whereas two weeks ago it could have been sold for $224/ton. Currently, there are no grounds for price increases, but this may change depending on factors that are currently unknown. Independent grain market expert Alexander Korbuit also notes that there are currently no reasons to increase wheat prices.
Elena Tyurina, Director of the Analytical Department of the Russian Grain Union, notes that over the year, export prices for Russian wheat have decreased by 25%, for French wheat by 32%, and for American wheat by 24%. As of February 20, a ton of Russian 4th class wheat cost $227 FOB Black Sea, which is 3.3% less than a week ago. There has been no discount on Russian wheat since early January. Over this period, French wheat has decreased by 3.9% to $222/ton. Domestic prices have also decreased, especially in the South of Russia, where they have decreased by approximately 200-300 rubles/ton.
Vladimir Petrichenko, the General Director of the analytical company ProZerno, previously noted that in the coming months international shipments may face challenges due to the price collapse situation. This could have a negative impact on export rates. Domestic prices are also decreasing, but not as quickly as in the global market. This creates difficulties in grain procurement to fulfill contracts. In addition, exporters are already facing serious problems due to large grain stocks purchased at a higher price than the global market.
