Demand and new sales of Russian wheat fade on supply concerns

Export demand for the Russian wheat and new sales faded at the end of last week due to supply risks in the Black Sea, analysts said on Monday.

Russia invaded Ukraine on Feb. 24, calling its actions a “special operation”.

“There are almost no sales,” IKAR agriculture consultancy said, adding that it estimates the current “virtual” price for Russian wheat with 12.5% protein content from the Black Sea ports at $340 per tonne free on board (FOB).

Sovecon, another consultancy, said demand for Russian wheat fully stopped on Feb. 24. Before that, the price was at $314 per tonne, it said.

Navigation in the Azov Sea was stopped on Feb. 24, and while Russian Black Sea terminals continue to load and ship grain, there is till a big question mark over new shipments due to a lack of freight offers, Sovecon said.

Sovecon estimates that Ukraine has around 6 million tonnes of wheat left to export in the 2020/21 July-June season and 13-14 million tonnes of corn.

Russia, according to Sovecon, has around 7-7.5 million tonnes of wheat to export by the end of June and 1-2 million tonnes of corn.

“Previously-signed contracts are being fulfilled (from the Black Sea),” said a Russian trader, adding that the Azov sea ports remain closed.

“There is a pause,” another Russian trader said, referring both to demand for Russian wheat in the Black Sea and new sales.

Prospects for Russia’s and Ukraine’s spring grain, which is supposed to start soon, could also be affected by the conflict.

“Farmers need to start fieldwork shortly and there is a big question mark over their operation in Ukraine,” Sovecon said.

Reuters

Tags: Russia, grain, wheat, supply and demand balances, Ukraine