SovEcon sees slowdown in Russia's wheat rally, even as Egypt pays most in 3 years


SovEcon forecast a slowdown in gains in Russian wheat prices, even as Egypt’s Gasc grain authority paid the most for the grain in three years, taking nearly to 11% the price increase it has sustained so far in 2018.
Moscow-based SovEcon - reporting a 6.5% rise week on week to $209.50 a tonne in export prices of Russian wheat with 12.5% protein - flagged the support to values from US drought, which has also been a major boost to futures markets, and from a “decline in wheat supply from Ukraine”.

“The drought in the US may continue to support prices,” the influential analysis group said.

However, it expressed “doubt that Russian wheat export prices will continue to increase rapidly.

“We believe that the current level of prices is very attractive for sellers.”

Price gains

Russia’s wheat export prices are now up 9.7% so far this year, on SovEcon estimates, to their highest since late 2014.

And the prices paid by Gasc - which on Tuesday bought 120,000 of wheat from Russia, the latest of orders totalling 4.74m tonnes from the origin this season - have risen even faster.

At Tuesday’s tender, the authority, which is often charged a premium by merchants for reasons of bureaucracy and Egypt’s somewhat erratic restrictions on cargo impurities, paid an average of more than $214 a tonne excluding freight.

That is up 10.8% from the $193.35 a tonne it paid for Russian wheat at a December 27 tender.

Freight prices have risen too, with Gasc paying more than $16 a tonne for shipping, also up some 11% so far this year.

Russian stranglehold

Gasc has now bought 5.87m tonnes of wheat at tender so far for delivery in 2017-18, which started in July, of which more than 80% has been bought from Russia.

Tuesday’s tender attracted offers of a total of nine cargos of wheat, of Romanian and Russian origin.

The previous tender, two weeks ago, also received offers of nine cargos of Romanian and Russian origin wheat, albeit at, generally, lower prices, with Gasc paying $208 a tonne excluding freight that time.

The authority has not since August bought wheat from outside these two countries.

Barley supply squeeze

SovEcon underlined too the continued rise in feed barley prices, which extended their unusual premium over wheat, soaring $11.5 a tonne to $217 a tonne week on week.

The analysis group highlighted “difficulties with finding large lots of barley both in Russia and Ukraine”.

The clamour for barley exports, which as Agrimoney has reported has also lifted prices in France to an unusual premium over wheat, has fostered a doubling to 3.98m tonnes in Russia’s wheat exports in 2017-18, up to February 21.

Wheat exports were up 40% year on year at 33.6m tonnes.

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