Have Russian wheat prices reached a floor? Grain market daily

• UK feed wheat futures (Nov-24) closed at £192.10/t yesterday, gaining £0.35/t from Tuesday’s close. The May-25 contract rose £0.40/t over the same period, to close at £203.30/t.
• Wheat futures found support from Egypt’s tender for a record 3.8 Mt of wheat announced on Tuesday. Jordan issued a tender for 120 Kt of wheat yesterday, which, in addition to Algeria’s tender for 50 Kt late on Tuesday, supported the demand outlook further. Lingering concerns regarding the rain-interrupted wheat harvests in France and Germany also offered support.
• Paris rapeseed futures (Nov-24) closed at €460.00/t yesterday, up €10.25/t from Tuesday’s close. The May-25 contract also gained €10.25/t over the same period, to close at €462.50/t.
• Despite weakness in Chicago soyabean futures, Paris rapeseed markets tracked support in the wider vegetable oils market. This support followed a 2.4% rise in Brent crude oil futures (nearby) to close at $78.33/bbl, largely attributed to a tighter than expected supply of US crude oil.  

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Following an earlier than usual harvest due to abnormally hot weather, Russian wheat reaching the global market pressured physical wheat markets globally during July. Russian milling wheat (12.5% protein) for export was quoted around $217 - $218/t (FOB Novorossiysk) earlier this week by UkrAgroConsult, around $25/t less than this time last year.

Russian wheat export prices

During May, concerns of frost damage and dry weather in Russia triggered a considerable rally in global wheat markets. However, through June, markets dropped back on news that the frosts in Russia had not caused as significant crop damage as feared, and that Russian wheat export commitments would not be impacted.

Moreover, abnormally hot weather in June accelerated the Russian wheat harvest. This meant that new crop Russian wheat was available on the global market earlier than usual going into the 2024/25 marketing year. By early July, 6.9 Mt was harvested for the 2024/25 wheat crop in comparison to 0.2 Mt last year (SovEcon).

Russian wheat export pace

Russian wheat exports for June were estimated 14% above last year’s pace at 4.3 Mt (Rusagrotrands). However, July exports were estimated 20% lower than last year’s record July figure by SovEcon at 3.6 Mt.  Reduced farmer selling during July played a key role in the reduced export pace as prices reached levels where profit margins were narrow or negative (IKAR).

Also, Turkey’s ban of wheat imports until 15 October is likely to be weighing on Russian export prices. For the 2023/24 marketing year (July – June), Turkey was Russia’s second largest export destination for wheat, taking 7.0 Mt. Recently, there has been speculation that Turkey’s wheat import ban could extend past 15 October, which could continue to remove demand from one of the key global wheat importers.

What does this mean for wheat prices going forwards

While Russian wheat prices are pricing notably lower than last year, there is now speculation in markets that a floor price has recently been found. The high levels of global tenders this week (see Market commentary) offer some support to this view. This could help alleviate further pressure on physical wheat prices globally.

However, any opportunity for prices to rise considerably in the short-term is likely to be hindered by ample Russian wheat stocks. The country’s stocks were estimated at 20.3 Mt in July, 21% higher in comparison to last year (SovEcon). What’s more, Russian wheat exports has not been in the only pressure on global wheat markets. Competitively priced US maize has also been a key factor weighing on the global wheat market so maize markets will also need to continue to be watched.

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