Russia’s fourth-grade milling wheat, the country’s main export variety, was $265 a metric ton on a free-on-board basis in the main Black Sea port of Novorossiysk on May 12, above $247 a ton for U.S. wheat in the Gulf of Mexico, Zlochevsky said yesterday citing union data.
Wheat prices fell 0.4 percent to $6.63 a bushel in Chicago yesterday. They’ve dropped 17 percent in the past year on rising world production and slowing demand for U.S. supplies. In Russia, fourth-grade milling wheat prices have risen 23 percent since the season began on July 1 to 6,717 rubles ($210) a ton in the week ended May 18, according to union data.
Egypt, the largest global buyer of wheat, has purchased mostly U.S.-grain supplies since the start of February as well as Canadian, Australian and Argentine grain. One of the latest tender on April 5, the country bought 115,000 tons of U.S. wheat. Russia hasn’t sold any grain to the Egyptian state since January, according to data compiled by Bloomberg.
“We are losing competition to our U.S. rivals,” Zlochevsky said. “That is why our export volumes decreased despite our big export capacity.”
The price exporters have been paying farmers for the fourth-grade milling wheat in Russia has been rising from 5,466 rubles a ton at the start of the season and shippers can’t compete with U.S. soft red winter wheat prices, Zlochevsky said.
Russia’s wheat exports were 1.29 million tons last month, down from about 1.35 million tons in March, when some of the main export destinations included Libya, Jordan, Iran and Iraq, according to OOO ProZerno Moscow-based agriculture consultancy. The country’s wheat exports may fall to 800,000 to 900,000 tons this month, Vladimir Petrichenko, the company’s director, said by phone in Moscow today.
Russia exported more than 25 million tons of grain as of today, and shipments may reach 26 million to 27 million tons in the season ending June 30, Zlochevsky said.
Domestic prices are expected to start falling then as Russian farmers begin to harvest the new crop, Zlochevsky said, adding they’ll slump further from late August to October. That period is expected to be favorable for exporters who may then be able to compete internationally, he said.
Grain exports in the next marketing year are expected to be between 20 million tons and 30 million tons depending on the margin between domestic and world prices, Zlochevsky said.
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