The wheat price in Russia has reached its lowest level in 2 years. This concerns the physical price for milling wheat on the export market. The low price is mainly due to the expectation of a large harvest in Russia.
While the United States Department of Agriculture (USDA) has forecast the harvest in Russia WASDE report lowered, local analysts have actually raised revenue expectations. The WASDE report estimates the Russian harvest at 72,5 million tons, but analysts from the country itself think more of 75 million tons. It is an important reason for the falling price in Russia.
In addition, the demand for Russian wheat is less due to the large worldwide supply. The price showed a sharp decline, especially over the past month: -$10 per tonne. It now pays about $186 per tonne (FOB) in Russia. Analysts expect this to be the lowest point for a while.
Less export
While the price of wheat in Russia was kept high, prices for wheat on the international market fell. Wheat exports from Russia are therefore running less smoothly than normal. Russia is now competitive again on the export markets, as suppliers from the country are now winning tenders again.
It is striking that the price is now falling, given that wheat prices are rising worldwide. These price increases were mainly caused by dry conditions in the main exporting countries in the Southern Hemisphere. The fact that the American spring wheat harvest is still well behind previous years also plays a role.