SovEcon, a leading agricultural consultancy, estimates that Russia will export 2.0 million metric tons of wheat in April.
This figure represents a significant decrease compared to the 5.0 million metric tons exported in April of the previous year and is also notably lower than the five-year average for April exports, which stands at 3.5 million metric tons.
Russia’s wheat export rates have remained below average for four consecutive months.
This slowdown can be attributed to a decline in the profitability and competitiveness of Russian wheat in the global market.
Several factors could be contributing to this situation, including increased competition from other wheat-exporting countries, changes in global demand, and fluctuations in currency exchange rates.
The lower export rates could have implications for the Russian economy, as well as for global wheat prices and food security.
Outstanding sales
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The decline in Russian wheat sales persists, as evidenced by the dwindling amount of outstanding sales.
This figure currently stands at 1.1 million metric tons, marking a notable decrease from the 1.3 million metric tons recorded in the preceding month.
This downward trend suggests a softening demand for Russian wheat in the global market.
Several factors could be contributing to this decline, including increased competition from other wheat-exporting countries, fluctuations in global wheat prices, and possibly geopolitical considerations.
“The competitiveness of Russian wheat has decreased”, SovEcon said.
Varying prices
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Last week, the global wheat market saw varying prices depending on the origin and protein content.
Russian wheat, with a protein content of 12.5%, was offered at a price range of $250 to $252 per metric ton on a Free on Board (FOB) basis.
This means that the seller’s responsibility ends when the goods are loaded onto the ship, and the buyer assumes all costs and risks from that point onwards.
Meanwhile, French wheat with a similar protein content was quoted at a slightly lower price of $244 per metric ton FOB. This price difference could be attributed to factors such as transportation costs, quality perceptions, and market demand.
Additionally, wheat in the ports of Constanța, Varna, and Burgas (CVB) was offered at $248 per metric ton.
These ports are located on the Black Sea coast and serve as important hubs for grain exports from Eastern Europe.
The price of wheat in these ports was influenced by factors such as local supply and demand, competition from other origins, and logistical considerations.
Turning to other suppliers
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“Major buyers of Russian wheat are likely turning to other suppliers,” the consultancy said.
The Algerian state buyer OAIC has recently concluded a purchase of 570,000 to 600,000 metric tons of wheat. The wheat, sourced from various origins, was procured at a price of $267.5 per metric ton on a C&F basis.
Based on SovEcon’s analysis and estimations, it is believed that Russian wheat was priced at a premium of $2 to $3 per metric ton compared to the OAIC purchase price.
This price difference suggests that the wheat procured by Algeria likely originated from suppliers in Romania, Bulgaria, and Ukraine, where prices were more competitive and aligned with the OAIC’s purchasing terms.
Export operations are not very profitable due to relatively high prices. Exporter margins have been in the negative since the end of last year; they were $5-10/mt last fall.
The USDA’s April estimate for Russian wheat exports in the 2024-25 season was 44.0 million metric tons, whereas SovEcon’s current estimate is 40.7 million metric tons.
Andrey Sizov, managing director at SovEcon, said:
The limited supply of Russian wheat at current price levels may support the global market.
