Why are Russian wheat prices surging since the beginning of 2025?

Domestic prices for Russian wheat, specifically those with a protein content of 12.5%, have seen a notable increase since the beginning of the year. 

According to SovEcon, a leading agricultural consultancy, the price has risen from 14,725 rubles per metric ton (equivalent to $145 per metric ton) to 15,525 rubles per metric ton (equivalent to $158 per metric ton). 

This price surge is primarily attributed to a significant increase in demand from exporters, who are actively seeking to purchase Russian wheat for international markets.

Firm demand for Russian wheat

The demand for wheat from exporters within the domestic market has seen a significant resurgence over the past week. 

This increased demand is primarily attributed to the rising prices in the global wheat market. 

As a key indicator of this global price trend, the price of wheat on the French Matif exchange experienced a notable increase. 

Specifically, on January 29, the price rose by €2.5, which is equivalent to $3, compared to the previous week. 

This price jump brought the overall wheat price to €233, or $242, showcasing a significant upward shift in the global wheat market. 

This upward trajectory in the global market has, in turn, stimulated domestic exporters to procure more wheat, leading to the observed revival in demand within the domestic market.

Rising prices

Russian wheat with 12.5% protein was quoted at $237–$239 per metric ton free-on-board (FOB) by January 29, which was an increase of $1.5, according to SovEcon. 

Wheat prices experienced the most significant domestic increases in the South, the country's main export region. 

Prices for Class 4 wheat there rose by 900 rubles over the month to 16,350 rubles per metric ton ($167/mt), compared to a 250 ruble increase in the Center.

In recent months, exporters have been actively purchasing wheat, SovEcon said. 

Russian agricultural producers sold 4.8 million metric tons of wheat to exporters in December, up from 4.3 million metric tons in November. The increase was driven entirely by higher sales in the South.

Exports though have remained sluggish.

SovEcon reports that wheat exports in January are projected to be 2.2 million metric tons, significantly lower than the 3.6 million metric tons exported a year ago and the five-year average of 3.1 million metric tons. 

As a result, export activity has been notably slow.

Strategic stockpiling

The current market trend reveals a fascinating dynamic: active domestic grain purchases are occurring alongside relatively slow export activity. 

This could suggest a strategic move by exporters. They might be stockpiling grain reserves, anticipating a potential rise in prices in the future. Alternatively, they could be holding onto their supply, awaiting a resurgence in export demand. 

Stocks in southern Russia decreased to 3.7 million metric tons in December from 7.0 million metric tons in the previous year, amid active sales and relatively low production, SovEcon estimates showed.

Andrey Sizov, managing director at SovEcon said:

SovEcon forecasts Russian wheat exports for 2024/25 at 42.8 million metric tons compared to the US Department of Agriculture’s estimate of 46.0 million metric tons.

“Rising domestic prices and a strengthening ruble could stabilize or further increase prices for Russian wheat, thereby supporting the global market,” Sizov added.