Russian wheat prices have risen near a 20-month high, driven by demand for exports to the likes of Bangladesh, Egypt and Turkey amid lower yields this year in three major producers -- France, Romania and Ukraine.
As of Sept.14, Russia wheat exports since the July 1 start of the 2020-21 season totaled 10.1 million mt of wheat, according to the Federal Centre of Quality and Safety Assurance for Grain and Grain products.
That was the second highest after the 11.2 million mt shipped over the same period of the 2018-19 season, according to Russian customs data.
Platts Russian wheat 12.5% FOB Black Sea deep water was assessed at $238.00/mt on Sept. 22, up $24.75/mt from Sept. 1, according to S&P Global Platts data.
Also supporting prices were unfavorable weather conditions in the EU and parts of the Black Sea region which was expected to hit 2020-21 wheat production yields. The US Department of Agriculture has forecast EU and Ukrainian production to be 12% and 7.4% lower, respectively, year on year, according to its World Agriculture Supply and Demand Estimate September report.
Egypt –- the world's largest wheat importer -- has been opting for more competitive Russian wheat. Some 80% of wheat booked by state grain importer GASC was of Russian origin, compared with 48% at the same time last year.
Demand for wheat has also increased on the back of importing countries building their state reserves due to fears surrounding COVID-19 and because of continued dry weather conditions in parts of the Black Sea region raising concerns about soil moisture levels and the resulting lack of wheat germinating as farmers sow winter crops for the 2021-2022 season.
Platts Ukraine Wheat 11.5% FOB Black Sea has risen $25.50/mt from Sept. 1 to $237.00/mt Sept 22.
The lower yield in France and Romania and resulting higher prices have been evident in GASC's wheat tenders, with French wheat offered for the first time since July at GASC's Sept. 22 tender, while Romanian wheat has remained absent.
Despite the rally in Russian and Ukrainian wheat prices of late, French wheat has continued to be less competitive in Egypt's tenders, paving the way for uncommon origins, such as Poland, to land sales in GASC's tender on Sept. 16.
