Average prices for the Russian wheat with 12% protein increased up to $325 per ton, according to the report of the analytical center «Sovecon». According to the director of Sovecon Andrey Sizov, the prices reached its highest level since the season 2012/13. According to Mr. Sizov the key factors were the limited supply of grain in the world, in particular, difficulties with the harvest in Russia and Canada, as well as relatively high demand. The USDA reduced in October its estimate of world wheat reserves by 6 million tons, to 277.2 million tons, and its forecast for the harvest in Canada by 2 million tons, to 21 million tons. The Russian Ministry of Agriculture expects that more than 123 million tons of grain in net weight will be harvested in Russia this year.
Dmitry Rylko, the Director General of the Institute for Agricultural Market Studies, says that the latest price increase for wheat on the world markets was caused by the demand from the state-owned companies in a number of countries. In particular, the Egyptian GASC purchased wheat at a very high prices at its tender on October 27.
The Chairman of the Board of the Union of Grain Exporters Eduard Zernin considers that the world market «has come to terms with the inevitable rise in grain prices» and the largest importing countries no longer hope for a correction. «The reserves of our competitors began to run low, and we began to win back our positions in the MENA region», — says Mr. Zernin. Thus, according to the forecast of Mr. Zernin in the second half of the current season Russia may become the leading grain supplier in the MENA region, since competitors were actively selling their stocks at the beginning of the season.
Dmitry Rylko notes that with the current extremely high world prices Russian wheat exporters have the opportunity to get profitability. Before that, there was a long period of low activity and very few new contracts were concluded, as a resultthe purchase price in ports decreased, and now farmers can intensify sales before the New Year holidays, considers Mr. Rylko.
However, according to the experts, despite the current increase in prices on the world markets, the export of Russian grain won’t increase significantly in the coming months due to the fact that exporters need to take into account the size of the export duty.