Russia starts exporting wheat agressively; market is flooded

Since 1 August 2011 Russia has started an aggressive export of wheat. A day earlier, on July 31, the ban on exports was lifted and Russian companies began a real invasion on the market. “Russian wheat is preferred on the markets in Egypt,” said yesterday Antonina Belopitova from the Sofia Commodity Exchange. The country has produced an abundant harvest this year and offers huge quantities on the market. Its ambition is to rank second in the world, following the U.S., in terms of milling wheat export.

In the Black Sea region, however, an upward movement of prices on an annual basis can be noticed. One reason is that Ukraine introduced very high customs duties last year. Thus, now that it is starting to export from the new crops, purchase prices are inevitably up. Currently, milling wheat is traded at $220-223 per tonne. “These however, are purchase prices,” explained Belopitova. FOB prices of wheat have fallen by 8% in the U.S., by 15% in France and by 10% in Germany, compared to last September.

“Interestingly, for two or three months now, commodity prices have remained unchanged or have even decreased,” commented Vassil Simov, CEO of the Sofia Commodity Exchange.

The collapse of stock markets in mid-September caused a steep decline in prices. On September 30, there was a forecast that the global output would exceed consumption for the first time in a long period. Grain output worldwide is expected at 678.2 million tonnes while consumption is forecast at 676.9 million tonnes.

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