Exchange prices for wheat rose after the introduction of export quotas in the Russian Federation

The authorities of the Russian Federation established a quota of 24 million tons from February 15 to June 30, 2024 for the export of wheat, corn and barley to countries that are not part of the Eurasian Economic Union, while in 2022/23 MR the quota amount was 25.5 million t together for all cultures.

This led to a speculative growth of wheat quotations on the US stock exchanges by 2.1-3.2%, which was also facilitated by the intensification of exports.

March futures rose yesterday:

• by 3.2% to $233.8/t - for soft winter SRW wheat in Chicago (+3.1% for the week),
• by 3.2% to $236.2/t - for HRW hard winter wheat in Kansas City (+2.4%).
• by 2.1% to $268/t - for hard spring HRS-wheat in Minneapolis (+1.1%).

At the same time, on the Paris Euronext, wheat futures yesterday fell by 0.1% to €222/t or $250.4/t (-0.9%).

According to the MSG of the USA, during December 15-21, wheat exports increased by 50% compared to the previous week to 428,000 tons, and in general in the season reached 9.33 million tons or 47% of the forecast for 2023/24 MR.

In the period from August 1 to December 17, Canada increased wheat exports by 9.4% from 7.55 to 8.26 million tons compared to the same period last year.

In the first half of 2023/24, despite the sanctions, the Russian Federation exported a record 30.8 million tons of grain, including 23.7 million tons of wheat, which is 33% and 23% higher than last year's rates, respectively. Before the quotas come into force, wheat exports will amount to 28-30 million tons of the projected 50 million tons, so the new restrictions will not significantly affect supplies from the Russian Federation in the second half of the season.

Prices for Russian wheat remain at the level of $230-235/t FOB, but against the background of saturation of the market with offers of wheat from Argentina and Australia in December, exports slowed down significantly and for December 1-25 amounted to 3.1 million tons of grain, which is 27.5 % inferior to last year's corresponding figure.

In Ukraine, the purchase prices for wheat increased due to the increase in the dollar rate by 2%. Traders intensified the purchase of food wheat, the prices of which are already $20/t higher than those of feed wheat. During the week, demand prices for fodder wheat with delivery to Black Sea ports rose to $156-158/t or UAH 6,300-6,400/t, and for food - to $175-180/t or UAH 7,500-7,700/t.

Short supply of food wheat is forcing processors to raise purchase prices, although prices for flour and bran remain fairly low.