Wheat exports decreased in October. This may be due to extremely low purchase prices

From October 1 to October 20, wheat exports from Russia amounted to 3.48 million tons (total grain - 3.84 million tons), which is 12.2% (12.6%) less than in the same period last year. The director of the analytical department of the Russian Grain Union (RGU), Elena Tyurina, told Interfax about this. According to her, in total, about 5.1 million tons of wheat can be exported in October; last year, 5.4 million tons were exported in this month, but this was the maximum figure in the last six years.

The main buyers of Russian wheat—Türkiye and Egypt—reduced purchases in October. Thus, shipments to Turkey decreased by 40% to 435 thousand tons, to Egypt - by 55% to 424 thousand tons. In third place is Bangladesh, where 276 thousand tons of wheat were sent, which is 38% less than a year ago , noted Tyurina. “The following rating lines are positive. 229 thousand tons were shipped to Pakistan; in October last year it was not among the buyers of Russian wheat. Shipments to Algeria, which is in fifth position, increased by 42% to 188.5 thousand tons, Tyurina told the news agency. “136 thousand tons were sent to Yemen, which is 1.6 times more than last year, and 107 thousand tons were sent to Kenya, almost 1.7 times more.” According to her, the upward trend in exports to Latin American countries continues, in particular, shipments to Mexico increased by 1.7 times.

Meanwhile, according to the forecast of the Rusagrotrans analytical center, Russia will supply about 80 thousand tons of wheat to China in July-October this year, and based on the results of the current season, exports could reach 200 thousand tons. “Exports in July-October will become a record. For the entire 2020/21 agricultural year alone, deliveries reached 88 thousand tons; in the last agricultural year (2022/23) they amounted to only 37 thousand tons,” the Rusagrotrans analytical center told Interfax. They also clarified that now the main shipments go through the ports of Vladivostok and Zarubino in the direction of the eastern ports of China, as well as through the Zabaikalsk station.

     According to the October forecast of the International Grains Council, wheat exports from Russia in the current season will amount to 49.1 million tons (48.6 million tons in the previous month’s report), production - 89 million tons (87.4 million T). The Council also raised the forecast for the gross harvest of all types of grain in Russia from 128.6 million tons to 130.2 million tons. The assessment of grain export potential increased from 58.6 million tons to 59.2 million tons.

According to independent grain market expert Alexander Korbut, there is now a slowdown in export rates compared to the record schedule for the first three months of the current agricultural year. This is due to extremely low purchasing prices, he believes. “The domestic market is sinking in the South, in the Volga region, and in the Center - no changes. This means that exporters are actually reducing purchase volumes - there are no long-term and serious programs now,” Korbut commented to Agroinvestor.

He believes that in October the volume of wheat supplies to foreign markets will be 4.4-4.5 million tons (last year - 4.8 million tons), but this is an optimistic forecast. Exports in November are still difficult to estimate, since the world market is not very active at the moment: December futures on the Chicago Stock Exchange are at $212-218/t. At the same time, FOB prices in the USA, France, and Germany have now increased by $10, while in Russia they are declining. “The Russian market is somewhat disconnected from the world market,” explains the expert.

In addition, the volumes of Russian grain are putting pressure on the market - the country has a high harvest again, Korbut continues. “We need to reduce the export duty. And we obviously need to recalculate the indicative price that the exchange gives us, and which the Ministry of Agriculture is guided by,” the expert is sure. In the meantime, both the duty and the indicative price are too high in Russia, which leads to lower purchasing prices and loss of incentives for agricultural producers.

It is still difficult to estimate export volumes at the end of the season, since it is strongly influenced by the state of winter crops in the Northern Hemisphere, and the volume of the harvest in the Southern Hemisphere. “But I believe that we retain the potential of 62 million tons of grain exports,” adds Korut. However, he concludes, the question is also what kind of policy for establishing quotas will the Ministry of Agriculture implement: will it be guided by the figure announced by the president - 60 million tons. In this case, the volume of the quota for the period of its introduction will be quite large.