Russian wheat prices plunge to July 2024 low amid abundant supply, slow exports

Wheat prices in European Russia have dropped to their lowest level since July 2024, continuing a downward trend, according to a recent report from SovEcon. 

As of January 14, the average price for fourth-grade food wheat fell to 13,050 rubles per metric ton ($165/mt) from 13,150 rubles per metric ton ($168/mt) a week earlier.

The price was 13,250 rubles per metric ton ($172/mt) a month ago, according to SovEcon’s data. 

Supply, price and logistics

“Wheat prices declined amid high supply in regions distant from ports and relatively weak demand,” the agricultural consultancy said in its latest update. 

Domestic wheat supplies are abundant, especially in the major producing areas of the Volga and Central regions, following substantial harvests. 

This ample supply has put downward pressure on prices in these key areas, with the Central region seeing a 400 rubles/mt drop to 11,700 rubles/mt, and the Volga region experiencing a similar decline to 11,500 rubles/mt over the last month, according to SovEcon. 

However, despite the strong production and lower prices, farmers are facing difficulties due to slow and inefficient rail transport, which hampers the movement of their crops to markets.

Slow export pace

The pace of the current wheat shipment from Russian ports is demonstrably slow, signalling a potential constraint in the export pipeline. 

A comparative analysis of the first two weeks of January reveals a notable shortfall against both recent and historical figures. 

Specifically, only 0.7 million metric tons (mmt) of wheat were shipped during this period.

This figure is lower than the 0.8 mmt shipped in the corresponding two weeks a year earlier, indicating a year-on-year decrease in export velocity. 

More significantly, the current shipment volume is substantially below the five-year average for the same period, which stands at a robust 1.3 mmt. 

This shortfall against the historical average suggests that the present logistical or market conditions are severely hampering the expected flow of Russian wheat to international buyers. 

The reduced pace warrants close monitoring as it may influence global supply dynamics and pricing in the near term.

Global competition and outlook

Shipments of wheat from Russia's main competitors have also fallen. 

In the first half of January, preliminary data indicate that the EU shipped approximately 0.3 mmt of wheat, a decrease from 0.6 mmt during the same period last year. 

Similarly, Ukraine's shipments totalled 0.3 mmt over this period, down from 0.4 mmt a year earlier.

Major grain importers are likely holding back, anticipating further price drops due to abundant supply from the Southern Hemisphere. 

This is evidenced by Algeria's state agency, OAIC, which purchased 600–720 thousand metric tons (tmt) of wheat in an international tender on January 19 at $253–254 per metric ton (mt) Cost and Freight (C&F). 

A substantial portion of this supply is expected to be sourced from Argentina, where export prices are at multi-year lows, around $205–210/mt, following a record harvest.

Domestic consumers' substantial wheat reserves are also contributing to their decision to submit lower bids.

“We do not rule out further declines in domestic prices in regions distant from ports,” Andrey Sizov, managing director of SovEcon said.