Ships continue calling at Russian ports for wheat

The suspension of sea grain exports from Ukraine and rumors of a halt to exports from the Russian Federation last week led to a rise in wheat quotes to multi-year highs , but it later became clear that ships were continuing to call at Russian ports, so quotes fell sharply amid profit-taking after a speculative rise.

Over the past week, September wheat futures had the following dynamics:

• decreased by 2.1% to $242.5/t – for soft winter SRW wheat in Chicago (+13.8% per month),
• increased by 0.8% to $267.9/t – for durum HRW wheat in Kansas City (+18.7%),
• increased by 2% to $259.5/t – for spring HRS wheat in Minneapolis (+17.5%),
• decreased by 3% to €229.25/t or $260.8/t for soft wheat on Euronext in Paris (+13%).

It should be noted that prices for hard spring wheat in the US continue to rise faster than soft wheat prices in Chicago, due to dry conditions and reduced harvest forecasts.

The biggest beneficiaries of the export overlap and price increases were Romania and Bulgaria, which increased sales, as well as the Russian Federation, which continues to export wheat from Novorossiysk.

Since July 10, shipping in the Azov-Don Canal of the Russian Federation has been limited due to successful impressions of drones on ships, so grain flows have been redirected to deep-water ports. The Russian Federation exports 30-35% of its wheat through the Sea of Azov, but now the freight for transportation along the Azov-Marmara Sea route has risen to $70/t, with a normal market price of about $25/t. Over the week, the volume of wheat loading at the Black Sea port of Novorossiysk increased compared to the previous week from 209.3 to 426.9 thousand tons, and in total from July 1 to 26 it amounted to 812.7 thousand tons, which is 36% higher than the corresponding figure last year.

Despite the actual suspension of Ukrainian grain exports through the ports of Greater Odessa since last week, wheat exports from Ukraine in the 27 days of July reached 961 thousand tons, which is twice as much as last year’s corresponding figure (467 thousand tons) due to deliveries of old harvest grain at the start of the season.

Constant Russian attacks on ships off the coast of Ukraine, both in Black Sea ports and at the exit from the Danube, have practically paralyzed logistics and export purchases of wheat, which has led to a collapse in domestic prices.

During the week, export purchase prices for wheat in Ukraine with delivery to Black Sea ports fell by 1,500-2,000 UAH/t, in particular for food wheat – up to 8,000-8,500 UAH/t or $160-170/t, and for feed wheat – up to 7,500-8,000 UAH/t or $150-160/t, but there was demand for wheat with delivery to Danube ports at a price of 9,000-9,500 UAH/t or $180-190/t.

Increasing international demand for cheap Ukrainian wheat is forcing traders to look for new logistics routes for delivery through Danube ports or by rail to the port of Constanta in Romania.

However, the capabilities of the Danube route are currently limited due to a drop in water level of approximately 1.5 m, so navigation is only possible for vessels with a small draft, which limits the volume of grain transshipment.

Tags: Ukraine, Russia, Bulgaria, Romania, EU, prices, wheat, USA