Russia’s domestic wheat prices fell 10 percent this month as the harvest progresses at a quicker pace than last year, signaling more affordable supplies for traders seeking to export the grain amid global competition.
Average prices of fourth-grade milling wheat, the main shipping variety, have declined to 6,583 rubles ($203) a metric ton this month in southern Russia, the traditional source of grain for exports at this time of year, according to a report from the country’s Grain Union today. Traders usually buy more grain to export when the domestic price falls as it gives them a bigger profit margin for shipping.
The country is expected to export 20 million tons of all cereals, up from 15.7 million tons in 2012-13, according to Agriculture Ministry estimates. Russia has harvested 30.7 million tons of wheat and other cereals so far this season, up from 19.5 million tons a year earlier, according to Agriculture Ministry data.
“Russia’s grain potential is high and the country will be among major exporters,” Alexander Korbut, the Grain Union vice president, said by phone from Moscow today.
Russia is forecast to ship 17 million tons of wheat in the 2013-14 season begun July 1, ranking it fifth after the U.S., the European Union, Canada and Australia, according to U.S. Department of Agriculture estimates.
The global wheat production forecast for 2013-14 was raised earlier in July to a record 704 million tons on good prospects in all major growers except the U.S., according to a report by the Rome-based Agricultural Market Information System.
Wheat traded in Chicago, a global benchmark, fell 16 percent this year on a rebound in production after drought cut harvests across the Northern Hemisphere last year. The grain dropped 1 percent to $6.5325 a bushel on the Chicago Board of Trade by 11:17 a.m.
“Bigger harvests are expected to result in a significant increase in world cereal stocks,” according to the AMIS report. “More ample supplies could result in lower and more stable prices in 2013-14 compared to 2012-13.”
Russia won its first international tender of the season on July 18 when it sold two 60,000-ton cargoes of wheat to Egypt at $247.66 and $248.95 a ton. The world’s largest importer of the grain also bought from Romania and Ukraine, other Black Sea states.
“Russia confirmed the competitiveness of its wheat again,” Korbut said.