Further decline in Black Sea wheat exports: Grain market daily

• UK feed wheat futures (May-25) closed yesterday at £189.20/t, down £0.80/t on Tuesday’s close. New crop futures (Nov-25) closed at £196.40/t, down £0.40/t over the same period.
• The domestic market followed both Chicago and Paris futures down yesterday. Chicago wheat (May-25) dropped 0.3%, while Paris milling wheat futures (May-25) fell 1.3%. The US market faced pressure as snowfall in the Midwest was expected to protect crops, while the US dollar strengthened against other currencies. Meanwhile, weaker export demand and a stronger euro against the US dollar weighed on the European market.
• Paris rapeseed futures (May-25) closed at €521.50/t, down €1.50/t on Tuesday’s close. Nov-25 futures closed at €491.50/t, down €4.00/t over the same period. Rapeseed market declines followed the weaker Chicago soyabean futures, which fell due to the USDA's larger-than-expected US soyabean stock forecast.
• Soybean imports to the EU have reached 8.36 Mt since the season began in July, according to the EU Commission. This is a 10.4% increase compared to the 7.57 Mt imported by this time last year.

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After a strong start, the pace of Black Sea wheat exports has slowed significantly over the past three months.

Russian wheat exports have declined for three consecutive months according to information on trade flows from LSEG, dropping from 5.4 Mt in October to 2.5 Mt in January. The January volume represents a 35% year-on-year decline. Meanwhile, Ukraine's wheat exports decreased from 0.8 Mt in December to 0.7 Mt in January, with January marking a 59% year-on-year decline.

The decline in exports is underpinned by export quotas and production losses. Russia’s wheat production in 2024/25 fell by an estimated 10.0 Mt to 81.5 Mt (USDA) due to frosts and droughts in May 2024. To manage domestic inflation from lower supply, the Russian government implemented an export quota of 10.6 Mt on wheat, starting from 15 February to 30 June.

Meanwhile, a sharp drop in opening stock and a 0.4% decrease in production to 22.9 Mt this season have limited availability in Ukraine (USDA).

As a result, the USDA projects exports for Russia and Ukraine down by 17% and 14% year-on-year, at 45.5 Mt and 15.5 Mt, respectively.

Since the export campaign began in July, Russia has exported 29.9 Mt of wheat, while Ukraine has exported 8.1 Mt. This total is below last year's figures but above the three-year average for Russia. However, in Ukraine, the export pace has dropped below the three-year average but is still above last season’s level.

Where next?

Based on the USDA forecast and LSEG trade flow data, Russia is still expected to supply around 15.6 Mt of wheat, while Ukraine is projected to supply 7.3 Mt over the next five months of the season. That works out to 3.12 Mt per month for Russia and 1.46 Mt per month for Ukraine. Given the current trajectory and the export quota coming into effect in Russia next week, it is likely that the USDA’s export forecasts may not be met.  However, export estimates from private forecasts like SovEcon (42.8 Mt for Russia) and APK-Inform (14.5 Mt for Ukraine) are lower.

Looking ahead, if the downward trend in exports continues, we could see a tightening in global wheat export markets, which may support European and so domestic prices we progress through 2024/25. However, sluggish global demand, underpinned by slowing global economy, is likely to cap any significant price gains from the slowing Black Sea export pace.

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