Wheat rises in price against the background of lower forecasts for the harvest in Russia

The US Department of Agriculture ( USDA) has significantly lowered the forecast for the harvest in the Russian Federation in 2021-2022, as well as for exports from it.

This was the impetus for further growth in wheat prices.

According to the USDA, the forecast for the wheat harvest in Russia has been reduced from 85 to 72.5 million tons. Accordingly, the export forecast has also been reduced: from 40 to 35 million tons.

These are projections for the 2021-2022 season, which began on July 1, 2021 and ends on June 30, 2022.

At the same time, the data of the Russian Ministry of Agriculture for the current agricultural year is more positive:

81 million tons — harvest.

37.5 million tons — export.

Russian analysts are also lowering their forecasts, although they are more optimistic.

For example, the Institute for Agricultural Market Studies lowered the forecast for the harvest in Russia from 81.5 to 78.5 million tons, Sovekon — from 82.3 to 76.4 million tons.

Such trends lead to higher wheat prices. Over the past week, it has risen in price by a significant amount: about $ 13 per ton. Today wheat with 12.5% ​​protein is trading at about $ 267-268 per ton.

However, the head of Rusagrotrans Igor Pavensky notes, the sellers have set high prices, but contracts for them have not yet been concluded.

Market participants are waiting for further developments and a decline in quotations.

At the same time, on the domestic Russian market the price of wheat is also growing. Wheat of the third class has become more expensive by 625 rubles per ton and amounted to 13.4 thousand rubles, wheat of the fourth class has risen in price by 550 rubles per ton (13.3 thousand rubles).

The situation could be partially corrected by the strengthening of the ruble against the dollar, analysts say Sovekon.

“A strong ruble, strengthening of the ruble market and the effect of the duty are likely to lead to a decrease in the rate of export sales and a weakening of demand from exporters in the near future, which could cool the domestic market.”

Will the export duty change?


The duty is another mechanism that restricts exports and therefore should (at least in theory) help lower domestic grain prices.

At the moment, the Ministry of Agriculture of the Russian Federation is reducing the duty:

For wheat — from $ 31.4 to $ 31 per ton.

For barley — from $ 38.5 to $ 27 per ton.

At the same time, experts from IKAR believe that the introduction of a floating export duty will lead to losses for farmers in the amount of up to $ 3.5 billion. And it would be much more correct to abolish such a mechanism altogether.

However, the Russian government is not going to do this — at least in the next season.

The federal budget for 2022 is currently being drawn up taking into account the floating duty on grain.