Problems with Russian Black Sea exports are starting to pressure Central Asian grain markets

Problems with Russian grain exports through the Black Sea are increasingly affecting markets in Kazakhstan and other Central Asian countries. Escalation in the Black Sea, damage to grain terminals in Novorossiysk and a weaker ruble have sharply increased offers of cheaper Russian wheat via overland routes, putting additional pressure on Kazakh grain prices.

According to the Grain Union of Kazakhstan, Russian wheat prices continue to decline amid the large-scale harvest of the new crop. A good harvest in southern Russia and the Volga region is increasing supply, while problems with Black Sea exports are pushing sellers to look more actively for alternative markets. As a result, offers of Russian wheat have increased substantially both in Kazakhstan and across other Central Asian markets.

This is already affecting new-crop price formation in Kazakhstan. During August 10–16, prices declined across all wheat categories, with analysts citing cheaper offers of Russian wheat of comparable quality as the main source of pressure. Kazakh wheat export prices have also come under pressure, while export shipments remain relatively slow. The weaker ruble is giving Russian grain an additional advantage by making it increasingly attractive to importers.

The pressure is also spreading to other crops. Kazakh barley prices fell by 5 thsd tenge/t over the week due to increasing new-crop supply and weak exporter demand. On external markets, prices are being pressured by abundant offers of new-crop Russian barley to Iran, weak Chinese demand and higher freight costs from Aktau to northern Iranian ports, which increased from $29 to $35/t.

Problems in the Black Sea could even affect Kazakhstan’s linseed exports to the EU. As part of Russian grain exports are redirected toward the Baltic Sea, northwestern rail routes and ports are expected to become increasingly congested, affecting routes also used by Kazakh exporters. An alternative route through Belarus and Lithuania would be more expensive. As a result, Russia’s Black Sea export problems are creating a double impact on Central Asia — increasing price pressure through an influx of cheaper Russian grain while also complicating logistics for the region’s own exports.

Tags: prices, wheat, Russia, Kazakhstan, export, grain, barley