Wheat prices in Russia are falling, record surpluses have formed

Prices fell back to 2019 levels amid strong wheat supply and low demand from exporters, World of NAN reports citing Prime.

“Prices for wheat of the third class inside Russia by March 29 fell to 11,550 rubles. The last time such a low figure was recorded on November 27, 2019. Prices fell on the back of a high supply of wheat and low demand from exporters,” the Sovecon analytical center said in a statement.

The supply of wheat remains at a high level for the second half of the 2022-2023 agricultural year (from July 1, 2022 to June 30, 2023) against the backdrop of record stocks for this time - as of March 1, wheat stocks in agricultural organizations amounted to 17.4 million tons, which is 82 % above the five-year average.

At the same time, experts write, demand for wheat is declining amid relatively low activity of exporters: for example, the volume of current sales of wheat on the National Commodity Exchange on April 3 is estimated at 2.1 million tons against 2.5 million tons a week earlier.

The decrease in demand from exporters is facilitated by the fall in export prices for wheat: experts estimate the average FOB price of Russian wheat on March 22 at $279 per ton, which is the lowest since August 2021 – in their opinion, some exporters could take a break, fearing to see more lower prices in the short term.

“In the near future, Russian wheat prices will remain under pressure amid high supply. However, in the future, the market may be supported by a revival of demand from traders against the backdrop of high profitability of export operations and rising world prices,” the materials say.

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