London — High protein Russian wheat prices in the coasters survey have rallied to fresh highs as a supply crunch pushes buyers to pay more.
S&P Global Platts assessed FOB-Azov 12.5% protein wheat at $196.50/mt Monday, a 39-month high, up $17.25 on the week.
Similarly, CIF-Marmara 13.5% protein wheat raced to a 41-month high at $235.50/mt Monday, up $15.50 on the week.
The higher prices are the result of sellers withholding grain, seeking to profit from an ever growing carry.
Persistent dry, hot weather earlier this year has severely reduced soil moisture, which has caused yields to plummet on the year.
Winter and spring wheat yields, according to data from the Russian Ministry of Agriculture, fell to 3.74 mt a hectare Monday from 4.5 mt/ha a year earlier.
Most of the damage caused has been to crops in Southern Russia where yields are typically highest but also less logistically complicated to transship.
Previously reluctant buyers such as those in Turkey where replacement costs have soared due to a week Turkish lira against the dollar are now re-entering the market.
"The local harvest, which provided little high-quality protein, is nearly finished in Turkey. Buyers will have to start buying from Russia again, even with the high cost of the dollar," a source said.
This has begun to take hold, reflected in several CIF-Marmara trades heard done Friday for August shipment.
CIF-Marmara 11.5% protein wheat traded at $210/mt, 12.5% at $222/mt and $225/mt and 13.5% at $235/mt.
Given the expected low availability of high-protein wheat in Russia this campaign and that buyers are set to return, sources say the market could rise a further $20/mt when trading becomes more liquid in September.
