An increase in the Russian wheat harvest and the slowdown in exports from the country are currently the main news in the grain market. Another factor is the establishment of a new association of grain exporters in Russia. This can sometimes have more influence than initially thought.
Russia's largest grain exporters have united in a special association. This so-called 'Russian Union Of Grain Exporters' is led by a government company, which also ensures that the government has more control over grain exports in the country. At least, that is the fear of European traders. With membership in this association, exporters can participate in discussions with the Russian Ministry of Agriculture.
Since Russia currently dominates the wheat market, this could have a significant impact; especially because President Vladimir Putin intends to increase the value of Russian agricultural exports to $2024 billion by 45. The value of exports in 2018 was approximately $26 billion, of which $10 billion came from grain exports.
Huge harvest expected
In recent years, these growth plans have already been translated into action, and this can also be seen this year. For example, the Russian wheat area is the largest in 10 years and the crops are in good shape. As a result, Agritel has increased its harvest forecast by 3,8 million tons to 78,8 million tons. Another analyst firm even assumes a harvest of more than 83 million tons, which means that a record harvest is expected.
These good expectations for the new harvest mean that the pace of exports from Russia is decreasing for the current market. Buyers are anticipating a large harvest and are therefore buying less at the moment. Due to lower demand for wheat from the country, prices are also falling.