HAMBURG/PARIS: Russia’s wheat exports are picking up pace after an initial slowdown following the country’s invasion of Ukraine, with lower prices than many of its rivals helping secure sales.

Global wheat prices rose sharply following Russia’s invasion of its European neighbour on Feb. 24, driven by fears that the conflict could deprive the world market of supplies from the two countries, both of whom are major grain exporters.

While such fears proved justified in the case of Ukraine, where ports remain closed, Russia has seen strong sales despite payment issues, helping to fill the void in the global wheat market left by lost Ukrainian shipments.

Russia and Ukraine account for about 29% of global wheat exports and are the key suppliers for some of the world’s top buyers, including Egypt and Turkey. Having experienced a steep rise in the cost of importing fuel, many buyers are under pressure to limit as much as possible the hike in their grain import bill.

“Russian exports are certainly on the increase. The big export port of Novorossiisk was never closed and flows are moving out,” one European trader said. “Russian wheat is looking cheap and some importers face huge increases in their costs if they turn to alternatives like the EU, the US, Canada, Argentina and Australia, all of whom are more expensive than Russian wheat,” the trader added. Egypt saw a spike in Russian wheat imports in March, receiving 479,195 tonnes, a 24% increase from the same month last year, according to freight data seen by Reuters.

“New deals are being made by importers in countries like Egypt, Turkey, Syria, Iran, Lebanon and Libya. Some smaller countries suddenly facing big import bills are also trying to buy,” another European trader said.

Sovecon, one of the leading agriculture consultancies in Moscow, said high global prices and a period where the rouble was very weak had helped exports in the second half of March, adding that “an additional factor is that some wheat demand had to switch from Ukraine to Russia.”

PAYMENT ISSUES

There have been payment issues, with some Russian banks excluded from the SWIFT system and international banks unwilling to finance purchases of Russian wheat.