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Last week, export prices for Russian wheat with 12.5% protein for delivery in October increased by $10, reaching $226/ton FOB. The price for wheat with delivery in November also rose to $230/ton. French wheat became $8 more expensive, reaching $257/ton. German and American wheat also went up by $9, to $266/ton and $268/ton respectively. At the end of August, the prices for Russian wheat were stable at around $216/ton.
The market support continues due to drought in Russia, eastern Ukraine, and the Great Plains in the USA, as well as deteriorating crop conditions in Australia due to frosts at the end of September. The rising geopolitical tensions in the Middle East also influence the wheat market. These factors lead to an increased demand from importing countries. Saudi Arabia purchased 307 thousand tons of Russian wheat, including 252 thousand tons for delivery from December 10 to 25 and 55 thousand tons for delivery from January 10 to 25, 2025. The price was around $243/ton FOB Novorossiysk. Algeria is also conducting a tender for wheat procurement in November-December. Turkey plans to allow processors to purchase imported wheat after October 15, provided that it accounts for 15%, while the remaining 85% will be acquired from TMO stocks (Turkey's Grain Board).
Last week, the Grain Exporters Union announced its intention to appeal to the Ministry of Agriculture with a proposal to review the methodology for allocating grain export quotas for the second half of the season. This is explained by the fact that some market participants are currently exporting grain abroad at low prices, hoping to receive an increased quota. These actions inflict direct financial damage on Russian farmers and undermine the stability of grain supplies in the global market.
Alexander Korbuth, an independent grain market expert, believes that export prices for Russian wheat should be adequate compared to the world market. A price difference of $25-30 with French wheat and $20 with Romanian wheat is considered abnormal and not reflective of the situation, considering the additional costs incurred due to sanctions pressure. He believes that a normal discount size for Russian wheat should be $5-7/ton.
Prices for wheat with 12.5% protein at ports continue to rise. Prices for deep-water transportation increased by 700 rubles to 18,000 rubles/ton without VAT, while shallow-water prices rose by 400 rubles to 16,400 rubles/ton. A year ago, prices were at 14,900 rubles/ton and 11,600 rubles/ton respectively. Prices CPT Novorossiysk for delivery by rail rose by 550 rubles to 18,000 rubles/ton.
The domestic wheat market is also strengthening. In the South, prices for 4th class wheat rose by 750 rubles to 15,700-16,000 rubles/ton without VAT (EXW elevator), in the Center they increased by 200 rubles to 13,500-14,000 rubles/ton, and in the Volga region the cost increased by 400 rubles to 13,600-14,000 rubles/ton. In Siberia, purchase prices for 4th class wheat remained at 9,000-10,500 rubles/ton without VAT (EXW elevator). Prices for 3rd class wheat, depending on the region, range from 10,500 to 13,500 rubles/ton without VAT at the processor's gate.
According to revised data, wheat exports in September amounted to 5.26 million tons (including deliveries to EAEU countries), slightly lower than the previous year's level of 5.48 million tons. In total, 14.73 million tons of wheat were exported from July to September, compared to 15 million tons in the same period in 2023. Egypt remains the largest buyer, increasing imports in September by 0.8 million tons to approximately 2.9 million tons. Turkey follows, reducing imports by 0.69 million tons to 1 million ton due to the import ban until October 15. Algeria ranks third with 0.98 million tons.
