Grain prices stop forming normally in southern Russia amid export crisis

Market-based grain pricing in southern Russia has effectively broken down as export demand has largely disappeared. Resellers have become increasingly active in the Rostov region and Krasnodar Krai, taking advantage of excess wheat supplies and farmers’ limited storage capacity. Small farms without their own grain storage facilities are in the most vulnerable position.

According to farmers, intermediaries are offering around RUB 5,000/t for milling wheat, or about $60/t, while production costs are estimated at RUB 11,000–13,000/t, or roughly $132–156/t. In some areas, wheat is being bought at the same price regardless of quality parameters, which farmers see as a sign that normal market price formation has effectively disappeared.

The main reason is the export crisis: the domestic market is unable to absorb the volumes that were previously purchased by exporters through southern ports. This has given resellers more leverage over producers that need to clear storage space or have no capacity for long-term storage. Grain bought at distressed prices is mainly resold to local processors, while some volumes may be stored in anticipation of a recovery in exports.

Alternative shipments through Baltic ports have so far failed to restore meaningful export demand in southern Russia. Purchases remain limited, while traders are offering around RUB 6,900/t excluding VAT, or about $83/t, still well below production costs. Farmers say these volumes are too small to materially change the overall price situation.

As a result, the export crisis is increasingly being passed directly on to Russian grain producers. With exporters no longer competing actively for supplies, more of the margin is shifting to intermediaries and domestic buyers. Farmer associations are calling for loan extensions, lower financial pressure and greater clarity on when exports may recover, as current purchase prices do not cover production costs.

Tags: export, grain, prices, Russia