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Russian wheat spotlight: export prices rise as the pace of exports accelerates

 Last Update: 2022-11-26
 Source: Internet
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Foreign media news on November 15: Analysts said that Russia's wheat export prices rose last week because the pace of exports accelerated
.
The market is concerned about the negotiations to extend the
Black Sea export agreement.

As of last Friday (Nov.
11), FOB prices for Russia's 12.
5% protein new season wheat were $317.
5 per mt in Black Sea ports, up $5.
50 from a week ago
, according to Moscow-based consultancy IKAR.
Chicago wheat futures fell 4.
1 percent last week and Euronext's wheat futures fell 3.
6 percent
.

Data from SovEcon, another advisory firm in Moscow, showed that domestic wheat prices rose last
week.
The offer of domestic third-grade wheat (excluding VAT) was 12,825 rubles per tonne, 50 rubles
higher than a week ago.

Russia's wheat exports from July to November will reach 20.
2 million mt

On Tuesday, the head of the analysis center of Russian railway operator Rusagrotrans, Igor Smith, was head of the analysis center of Russian railway operator Rusagrotrans.
Pavinsky said that in the first five months of 2022/23, from July to November, Russian wheat exports are expected to exceed the same period
last year for the first time.

Between November 1 and 10, Russian wheat exports reached 1.
4 million mt, double
the same period last year.

Russian wheat exports, including to the Eurasian Economic Union, are expected to be between 5 million and 5.
2 million mt in November, up from 4.
8 million mt in October and 2.
9 million mt in November, the highest
since September 2020.
Exports for the first five months of 2021/22 are expected to be 20.
2 million mt, up 1.
7 million mt from 18.
5 million mt
in the same period last year.

Consultancy SovEcon raised its 2022/23 (July-June) wheat export forecast to 43.
7 million mt on Nov.
7, after an earlier forecast of 300,000 mt as the pace of exports accelerated
.

SovEcon expects Russia's wheat production to reach a record 100.
6 million mt in 2022/23, with an export potential of around 50 million mt
.
However, a weak pace of exports at the start of the year, a strong ruble exchange rate, and export tariffs limited the size
of exports in 2022/23.

The UN promotes Russian grain and fertilizer exports

U.
N.
Secretary-General António Guterres said at the G20 summit on Monday that the U.
N.
is working to remove all obstacles to Russia's free export of grain and fertilizers, and that engagement with the United States and Europe has helped to remove many of
them.
He said fertilizer prices are now three times higher than before the pandemic, so more must be done to address the global fertilizer shortage
.

The UN-brokered agreement on Black Sea grain exports on 22 July expires on 19 November
.
Russia demanded that the West lift sanctions against the Agricultural Bank of Russia so that the bank could be responsible for the settlement
of Russian grain exports.

Uncertainty about the outlook for the Black Sea deal has led to a slowdown in Ukrainian exports and an increase in Russian export demand

The pace of Russian grain exports is accelerating, while uncertainty over whether to extend the Black Sea export agreement has slowed
Ukrainian exports.
Russia has exported 6.
53 million mt of grain and other foodstuffs by sea since Oct.
1, up from 4.
59 million mt
in the same period last year, according to data from cargo ship tracking agency Logistic OS.

At the same time, Ukraine's cereal exports are slowing
due to uncertainty about the postponement of the Black Sea export corridor after 19 November.
Data from the UN Joint Coordination Centre showed that 31 ships loaded with agricultural products left Ukrainian Black Sea ports in the first 13 days of November, compared with 90 in the same period in October
.

Alexander Karavasev, senior economist at the International Grains Council (IGC), said that supply is expected to be very tight in all regions except the Black Sea region, which will continue to affect the market
.

The growth of Russian exports has helped Russia maintain its position as
the world's number one wheat exporter.
After the outbreak of the Russian-Ukrainian conflict at the end of February, shippers and insurance companies carefully avoided Russian grain for fear of Western sanctions; A strong rupee exchange rate, coupled with an export tax imposed by Russia, also dampened export sales
of wheat from Russia.

However, since Russia announced on October 29 that it would suspend its participation in the Black Sea grain export agreement, Ukrainian exports have slowed
significantly.
UkrAgroConsult said in a recent report that some ships are still sailing to Ukrainian ports as the expiration date of the agreement approaches, but importers have "little demand"
for new seaborne cargo.

Russian farmers have harvested 105 million tons of wheat

Russia's harvest of all grains was 152.
4 million tonnes (before drying and washing) as of Nov.
10, compared with 151.
0 million tonnes a week ago and 122.
5 million tonnes
a year earlier, according to data released by the Russian government.

Russia has harvested 105 million tonnes of wheat so far, compared with 78.
1 million tonnes in the same period last year.

Russian farmers began harvesting winter wheat
in July.
Russia's wheat yield rose to 3.
59 tonnes per hectare this year, compared to 2.
81 tonnes/ha
in the same period last year.

SovEcon said farmers were busy harvesting corn and sunflower seeds and sold the crops first, delaying wheat sales
accordingly.
This could lead to record wheat stocks at the end of the year, putting a lot of pressure
on wheat prices in 2023.

Port data showed Russia exported 1 million tons of grain last week, unchanged
from a week ago.
At present, both exporters and domestic consumers are complaining about the lack of railway wagons
to transport grain.

On October 31, IKAR raised its 2022 wheat production forecast for Russia to 101 million mt, up from an earlier forecast of 100 million mt
.
Wheat export potential has also been revised up from 48 million tonnes to 50 million tonnes
.
IKAR initially expects Russian wheat production to fall to 87 million mt next year due to lower prices and lower acreage due to rainy weather
.

On November 9, the USDA forecast Russia's 2022/23 wheat production was 91 million mt, up 21.
1%
from 75.
16 million mt the previous year.
Russian wheat exports in 2022/23 are expected to reach a record 42 million mt, up 27.
3%
from 33 million mt in the previous year.

Russian farmers have planted 17.
5 million hectares of winter cereals, up from 17.
3 million hectares a week ago and 18.
2 million hectares
in the same period last year.
The general weather situation is conducive to winter cereal growth, and rainfall in the south will improve crop conditions
in this major wheat-producing region.
In addition, the current harvest of sunflower seeds is seriously lagging behind, with only 64% harvested, lower than the previous average of 90%.

Wheat tariffs reduced

For the period from November 16 to 22, 2022, the export duty on Russian wheat and blended wheat is 2,922.
1 rubles (about $49.
07)
per ton.
This compares to 3,012.
0 rubles (about $49.
30)
per ton for the period from November 9 to 15.
For comparison, before the first ruble-denominated export tax was introduced in July, the wheat export tax from June 29 to July 5 was $146.
10/mt
.

Wheat sellers in Russia usually price their exports in dollars and buy wheat
in rubles on the domestic market.
The calculation of export duties has become more complicated
by the recent sharp fluctuations in the ruble exchange rate and reduced convertibility.
Since July, the Russian Ministry of Agriculture has priced wheat export duties in rubles and set the base price of wheat for which tariffs are calculated at 15,000 rubles instead of the previous $
200 per tonne.
The base price for the export of barley and corn was also changed from 185 US dollars / ton to 13,875 rubles
.

The ruble has continued to strengthen over the past week

The ruble was trading at 60.
60 to the dollar on Monday, up from 61.
10 rubles
a week ago.

The ruble approached 80 against the dollar on February 23 (before the outbreak of the Russian-Ukrainian conflict), then fell to an all-time low of $121.
53 to the dollar in early March, before soaring to a seven-year high
of $50.
01 to the dollar in June.
The strong ruble has raised concerns among Russian policymakers and exporters, as a strong ruble could weaken exporters' sales revenues
.
The ruble remains the world's strongest currency
so far this year.

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