Russian grain exports fall sharply at the start of the new season
Russia is facing difficulties shipping its new grain crop amid a decline in export volumes, according to the Foreign Intelligence Service of Ukraine. Grain exports totaled around 1.4 mln tons on August 1–20, down 2.5 times from the same period last year. Wheat shipments fell 2.6 times over the same period.
In September, Russian wheat exports could total 1.8–2.3 mln tons, down 52.1–62.5% year-on-year and potentially the lowest level for the month since 2010. As a result, significant volumes of the new crop remain on the domestic market.
Higher domestic supply is putting pressure on prices. Over the past week, prices for wheat, barley, sunflower seed and soybeans declined by 3.3–8.5%, while some prices are more than 40% lower than a year ago. In the Rostov region, which accounts for around 10% of Russia’s grain crop, a state of emergency was introduced in late August.
Measures under consideration to support the market include government grain purchases, preferential loans and subsidies, as well as loans secured against unsold crops. Other possible measures include changes to the export duty and compensation for part of the cost of transporting grain to alternative ports.
Most Russian grain exports have traditionally been shipped through southern ports, which accounted for up to 70% of shipments. The ability to redirect cargoes to other routes is constrained by limited capacity and higher logistics costs. In particular, transporting grain to Baltic Sea ports could add around $30–50/t to costs.
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