Russian 12.5% protein wheat market expects limited upside despite fresh 26-month high


Prices of Russian 12.5% protein deep sea port wheat reached a fresh 26-month high this week, to be assessed by S&P Global Platts at $199.75/mt Tuesday, its highest point since November 2015.

However, market participants are wary over how much further the market can strengthen as competitive Romanian-origination offers another outlet for short buyers.

Some sources said that the Russian 12.5% protein wheat market could strengthen to $202/mt and beyond in the coming weeks as fundamentals begin to firm on shortening supply and a number of shorts appearing for H2 March to April.

However, limiting price factors have been observed. "Prices will be rangebound at $200-$202/mt [over the next few weeks]. Romania is now offering as competitively as Russia and wheat from Pakistan is being traded in the Far East. Germany is offering at $208/mt," a source said.

Shortening availability of Russian 12.5% protein wheat in southern regions of Russia has been driving price strength as sellers look to the central regions to replenish their supplies.

However, a shortage of rail wagons has severely stemmed the flow of wheat from farm to ports in the south, attaching a premium to internally shipped wheat.

"If you buy wheat now in mid-February [from central Russia] it will only arrive in the second half of April," a source said of the limited internal logistics.

Nonetheless, given the severe lack of lower proteins feed, 10.5% and 11.5%, farmers have been blending 12.5% with lower proteins to produce 11.5% protein wheat, according to sources.

Prices for March and April loading have been largely flat. Offers for March-loading were heard at $200/mt Wednesday, in line with Tuesday; bids have been heard at $199/mt.


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