World wheat prices are currently showing a fairly strong decline, and experts do not see growth factors in the foreseeable future.
Currently, a ton of Russian wheat costs about $240 per ton.
Thus, it is trading cheaper than French wheat (about $250 per ton) or American wheat (about $245).
Such a discount, on the one hand, is unpleasant for exporters, because it does not allow them to earn more, but on the other hand, it is a competitive advantage, since it makes Russian prices more attractive.
In general, the situation in the world right now is difficult for wheat producers and exporters, says Dmitry Rylko, general director of the Institute for Agricultural Market Studies.
Demand on the world market has dropped significantly because Turkey, for example, has completely left the import market, and other participants are still waiting for prices to fall further.
And these are not unreasonable expectations, some experts are sure. The problem is that grain prices may indeed decline further.
For example, good crop prospects in several regions of the world can contribute to this. This also applies to Russia.
Despite the fact that the beginning of May this year was marked by frosts in a large area of the country, which could lead to the loss of part of the harvest, the harvest has already begun in some places, and the yield turned out to be good.
This gives reason to assume that in general the Russian Federation this year may once again harvest a harvest close to a record one.
Taking into account the fact that the reserves of the previous year are still far from being sold out, we have a powerful factor in restraining the rise in prices, and even their possible fall.
At the same time, analysts do not exclude the possibility that we may still see a rise in prices, but not in the near future, and the likelihood of this is not too high.
While the markets are waiting for grain from the new harvest, prices traditionally decline every year, and with a high probability it will be the same this time. At the same time, grain prices within Russia largely follow world prices, which also show a decline.
Experts believe that at least several factors could have influenced the fall in prices.
The first of them is Turkey’s withdrawal from the world grain import market, since this country has banned the import of wheat into its territory.
In addition, Russia’s most important competitors in this area, Europe and Ukraine, were able to offer lower prices at recent tenders.
Finally, the strengthening of the ruble exchange rate under the influence of new sanctions also caused a decrease in ruble prices for grain, despite the fact that in dollar terms it remained unchanged.
All this is negative for farmers, and if prices do not stabilize in the foreseeable future, this could greatly affect their profitability, analysts warn.
