Russian Wheat Prices on The Rise as Supply Issues Continue

The Russian wheat market continued experiencing an upturn in prices last week, UkrAgroConsult reports.

Export prices for Russian milling wheat closed the week up another $2-3/MT FOB in the deep-water ports and on average up $10/MT FOB in smaller ports. That substantial price rise in smaller ports results from still lower grain supply on СРТ-Azov bases compared with the deep-water ports, along with some growth in demand from Turkey.

Russian wheat prices have reached a four-year high. They are driven up mostly by domestic factors. Tight grain supply in southern Russia, reluctance of growers to sell grain at current prices, which rise in the domestic market with each passing day, are pushing up seller prices on a FOB basis as well.

Although Russian wheat becomes less competitive in the export market due to its rising price, traders are forced to raise it because they already have to pay more to get additional grain volumes in the domestic market.

Meanwhile, European wheat futures in Paris fell on Tuesday, undermined by weakness in Chicago and doubts over whether the hoped-for upturn in western European exports will materialize.

March milling wheat, the most active contract on the Paris-based Euronext exchange, was down 0.50 euro, or 0.2 percent, at 204.00 euros ($232.68) a ton at 1658 GMT.

The contract earlier on Tuesday fell to 203.50 euros, equaling Friday’s two-week low, but again found chart support to remain in its recent range.

The slow pace of export activity in Western Europe is causing concern that EU wheat may not benefit as much as thought from rising prices and declining wheat availability in rival exporter Russia.

European dealers have been hoping for several weeks that rising Russian prices will transfer more export sales to west Europe.