February 6 – Let’s Talk About This Russian Wheat Slump

If you’re a wheat farmer in North America, you know Russian exports and production are weighing on prices… But a window for farmers may be opening with the WASDE report coming this week.

If you’re a wheat farmer in North America, you know Russian exports and production are weighing on prices… But a window for farmers may be opening with the WASDE report coming this week.

The record production, the record exports, and the more favorable currency conditions had Russian exporters humming toward the end of the year. But we’ve now seen a three-week decline in wheat sales in Russia. That’s the first time this has happened since July 2017.

Interesting enough, weekly wheat sales were off 47,000 MT compared to the same period last year.

What’s the problem: Logistical problems at the ports — and blistering cold weather.

But don’t get too comfortable. All that’s going to happen now is a massive selloff. The nation’s ministry of agriculture says its going to release state-owned wheat stocks — at a time that they’re already expecting a record crop.

Russia is citing big margins in the wheat trade as a reason to do so. They’re calculating a three-month window to start selling their stocks. The plan now is to send another 500,000 MT of grain from its intervention fund. This was grain purchased between 2008 and 2016.

IKAR says that the 2018/19 marketing year, which kicks off July 1, will see Russia have roughly 45 MMT to 50 MMT of grain available for export. Overall grain production, is pegged at 120 MMT to 130 MMT.

Digging into those numbers, the group expects total wheat production to come in at a range of 73 MMT to 82 MMT. Exports are expected to hit anywhere between 32 MMT to 36 MMT. 

This suggests that Russia will see a decline in wheat exports from the 36.5 MMT that IKAR pegged for the country’s wheat exports this year.

It’s still a massive crop… and a massive number of exports. Heading into July, these factors will put additional downward pressure on prices.

This means we’re going to be looking for windows to sell as well.

It starts this week with the WASDE report… and we’ll hope for bullish news when we get more clues about the conditions of the winter crop later this month. We might pull the trigger again soon.

Russian wheat exports slip to 6-mth low as ministry plans sell-off

Sales of Russian wheat have slowed for the third consecutive week, posting the lowest weekly figure since July 2017, data from the ministry of agriculture showed Monday.

Weekly wheat sales of 466,000 mt were the lowest of the 2017/18 marketing year since the week ending July 30 and were 47,000 mt lower than during the same week in the 2016/17 marketing year.

Weather-related issues and logistical challenges have been behind the recent slowdown, according to market sources.

Despite the drop-off in sales, there are now plans afoot to bring extra supply to market.

On Friday, a research director at the ministry of agriculture unveiled government plans to  to release state-owned stocks for export on top of this year’s record-breaking harvest.

“Exporters have another three months to sell grain with a big margin,” said Anatoly Kutsenko of the ministry’s department of economics, investment and regulation, in a statement released on Monday.

“In June we will send 500,000 mt of grain from the intervention fund for export – grain bought between 2008-2016, which will affect prices,” Kutsenko said, referring to the state body which has been used in the past to buy up excess supply and regulate prices.

Despite the recent drop-off in the pace of wheat sales, the total figure for the year remains 33.8% above last year at 23.72 million mt.

Weekly barley sales bounced back from last week’s figure – up more than three times to 103,000 mt – but corn sales fell by almost half week-on-week to 78,000 mt.

Total 2017/18 barley sales are 90.3% higher year-on-year at 3.78 million mt, while barley is down 4.8% at 2.74 million mt.

Total grain exports for the year now stand at 30.45 million mt – a year-on-year increase of 33.9%.

H/T: Agricensus
About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.