Egypt purchased Russian wheat without a tender, and the market is waiting for Russia’s decision on the operation of the grain corridor

On November 11, a meeting of the UN Deputy Secretary General Martin Griffiths and the Secretary General of the UN Conference on Trade and Development Rebecca Greenspan with the Russian delegation led by the Deputy Minister of Foreign Affairs S. Vershinin took place in Geneva.

The Russian side assessed the negotiations as useful, positive, long and detailed, but has not yet made a decision on extending the agreement.

Another defeat of the Russians, namely the release of the Armed Forces of the Right Bank of the Dnieper and Kherson, strengthens Russia’s desire to harm the export of grain from Ukraine, so the decision to extend the agreement will be delayed as much as possible.

At the same time, the Russian Federation actively exports its own grain. According to Rusagrotrans estimates, from July to November the Russian Federation can export 20.2 million tons of wheat (18.5 million tons last year for this period), in particular in November – 5-5.2 million tons (compared to 4.8 million tons in October and 2.9 million tons in November 2021).

The Egyptian GASC, after the tender was canceled last week, held private negotiations during which it purchased 280,000 tons of Russian food wheat for delivery in December at a price of $362.5/ton CFR. In general, during private negotiations, Egypt has already purchased 1.4 million tons of wheat, mainly Russian.

Russian 12.5% protein wheat export prices for November-December delivery rose $2/t last week to $317/t, while US SRW wheat prices fell $47/t to $362 for the week $/t, and for French with 11.5% protein – by $16/t to $338/t FOB.

The Rosario Grain Exchange (BCR) cut its forecast for Argentina’s 2022/23 wheat crop by 1.9 million tonnes to 11.8 million tonnes, which would be double last year’s record and the lowest crop since 2015/16 FY, when production was 10 .9 million tons. Accordingly, wheat exports will decrease from 14.5 million tons in 2021/22 FY to 5-6 million tons in 2022/23 FY, although licenses have already been issued for 9 million tons. This will allow to increase the supply of Russian wheat to Brazil and Mexico, to which already in the current season 190 and 110 thousand tons were exported, respectively.

The Indian government may start selling wheat from the state reserve and reduce the import duty from 40% to 0% (currently duty-free imports are allowed only for processing) to stop the rise in prices, which despite the ban on exports from May 2022 rose by 27% to a record 324 $/ton Wheat stocks at state elevators on October 1 were 2.1 times less than last year and amounted to 22.7 million tons due to low volumes of purchases in the current season. Local traders believe that the real harvest is 10 million tons less than the official data.

While it is economically impractical for India to buy Russian wheat, the price of which is $317/t FOB at a freight cost of $60/t, so the main supplier may be Australia, which will harvest an almost record wheat crop this year. And the first deliveries have already started due to much lower freight rates.