russian wheat remains the cheapest on the world market

Russian wheat remains the cheapest on the world market as sellers are willing to cut prices to boost sales, adding pressure on quotations amid forecasts of a record wheat harvest in Australia.

At the January 10 tender, the state-owned Egyptian operator GASC received 6 offers for Russian wheat at a price of $337-345/t C&F and one offer each for French and Romanian wheat at a price of $351.82 and $350.19/t C&F, respectively.

As a result of the auction, GASC purchased 120,000 tons of Russian food wheat for shipment on February 10-25 at a price of $337/t C&F, while in the previous tender on December 29, 200,000 tons of Russian wheat was purchased at a price of $339/t C&F.

Despite the holidays, Russia exported 963,000 tons of wheat during January 1-8, compared to 480,000 tons during this period last year. In total, 23.5 million tons of wheat were exported in July-December, out of the USDA forecast of 43 million tons, while 21.6 million tons were exported in the same period last year, and in the record 2020/21 MR – 26.7 million tons.

According to USDA forecasts, the US may export 21.1 million tons of wheat in FY 2022/23 (which will be the lowest in the last 51 years) due to a shortage of domestic supply and low demand for American grain against the background of strong competition from cheaper wheat from Canada, Australia and the Russian Federation. Currently, the volume of export sales is the lowest in more than 20 years.

Much will depend on the harvest that India will harvest. According to Reuters forecasts, this year’s harvest in the country will be a record one, as farmers, against the background of high prices and good weather, have expanded their sowing areas due to high-yielding varieties. Since October 1, 33.2 million hectares have been sown with wheat, which is 1% more than last year, and the weather conditions favor the development of crops.

Increasing production will allow India to reduce food price inflation and consider the possibility of lifting the ban on wheat exports, introduced in May 2022 against the background of a decrease in the harvest due to unexpected intense heat and a global shortage of wheat caused by the Russian military invasion of Ukraine. According to the authorities, in 2022 wheat production in India decreased compared to the previous year from 109.5 to 106.8 million tons, although the USDA predicted it at the level of 100 million tons.

Tags: wheat, Russia, prices