Rally in Russian wheat export prices slows

A sharp rise in Russian wheat export prices slowed last week and analysts forecast further decreases after a monthly crop supply and demand report from the US Department of Agriculture raised Russia's 2018/2019 harvest forecast, analysts said on Monday. The monthly World Agricultural Supply and Demand Estimates (WASDE) report, published on Friday, raised the forecast for Russia's 2018/2019 wheat crop by 1 million tonnes to 68 million.
"(The) past week has passed under an expectation of (the) WASDE report, which was issued by the end of the day on Friday and turned out to be bearish for grains," Russian agricultural consultancy IKAR head Dmitry Rylko said. "The full digesting of this news by the market is expected during the current week," Rylko said.
Black Sea prices for Russian wheat with 12.5 percent protein content remained unchanged from last week, at $234 per tonne on a free on board (FOB) basis at the end of last week, IKAR said in a note. SovEcon, another Moscow-based consultancy, quoted FOB wheat prices up $2 at $234 a tonne, compared to a $15 rise last week, while barley was up $4.50 at $225.50 a tonne. It said the slight rise was due to a weaker rouble.
"The rouble weakened significantly last week. Traditionally when this occurs, Russian farmers put the brakes on sales as much as possible, awaiting higher rouble-based prices," SovEcon said in a note. Thomson Reuters data showed an average price of 12.5 percent protein content wheat as stable at $232.50 per tonne FOB.
As of August 8, Russia had exported 5.65 million tonnes of grain since the start of the 2018/19 season on July 1, a rise of 51 percent compared to the same period the previous year. This included 4.63 million tonnes of wheat, the agriculture ministry said.
SovEcon said on Friday it had lowered its 2018 grain harvest forecast from 113.9 million tonnes to 109.9 million tonnes. Citing low yields in the Volga region, the consultancy also said it was lowering its wheat harvest forecast from 69.6 million tonnes to 68.4 million tonnes. This was echoed by IKAR, which cut its 2018 grain crop forecast on Friday to 111.8 million tonnes and its wheat crop forecast to 70.1 million tonnes.