Russian Grain Export 2020 – 48 million tons / Experts Forecast Rising Wheat Prices !!!

https://www.agroinvestor.ru / Kulistikova, Elena Maksimova, Inna Ganenko - January 13, 2020

Grain export in 2020 may increase to 48 million tons !!!

In 2019, export amounted to about 37.5 million tons !!!

THE RESULT OBTAINED LAST YEAR WILL BE THE THIRD LARGEST IN THE HISTORY OF THE COUNTRY
A decrease in grain sales abroad in value terms by about $ 2 billion will be the main reason for the decline in total agricultural exports, said Daria Snitko, head of the Gazprombank Economic Forecasting Center. For 10 months, food shipments, including fish, to foreign markets were 2.3% behind the volumes last year, amounting to $ 19.8 billion compared to $ 20.3 billion in 2018, she compares. According to the expert, according to the results of 2019, the decrease was less than 6-7%.
According to the results of the 2019 calendar year, grain export will actually decrease and amount to about 37.5 million tons against 53.8 million tons a year earlier, the head of the Rusagrotrans analytical center estimates»Igor Pavensky. Despite a noticeable drop, this volume will be the third largest after the records of the last two years, he told Agroinvestor“. Deliveries will decrease primarily due to a sharp decrease in rates in the first half of the year, when stocks were exhausted and domestic prices exceeded export parity.
In the second half of the year, a very significant impact on shipments was exerted by increased competition from the EU, Ukraine and the USA. So, from July to mid-December, the export of soft wheat from these countries increased by almost 11 million tons to 39.9 million tons by the same period in 2018, while exports from Russia for this period amounted to about 19.1 million tons against 22 million tons a year earlier.
Given the decline in export rates in the second half of 2019, despite the existing export potential, it is likely that deliveries in the first half of 2020 will be higher than for the same period last year. According to the calculations of the analytical center ” Rusagrotrans”, Russia can ship abroad about 16.8 million tons of grain in January-June, excluding export to the EAEU countries, which is 3.4 million tons higher than the result of January-June 2019. “Further, everything will depend on the new crop, and so far the prospects are very good: the record area has been planted with winter crops, and their condition, according to Roshydromet, is better than previous years,” says Pavensky. “If we again approach the shaft of 130 million tons, then exports can increase significantly and reach 45-48 million tons per calendar year.”
Among the features of 2019 on the grain market, the expert highlights several facts. Firstly, agricultural producers significantly increased their storage capacities and, thanks to record prices of the last season, became financially more stable and less loaned, especially in the regions of the South and the Center close to ports. “This allows them not to dump significant volumes of grain onto the market immediately after a new crop arrives, but to sell it gradually,” Pavensky draws attention. “There has been a significant increase in competition for grain from the domestic market with respect to exports.” Also, due to the record quality of wheat in Russia in 2019, it was possible to sharply increase the share and volumes of supplies to Turkey. An important event was the opening of Saudi Arabia for Russian wheat. While there were no deliveries, but, undoubtedly, in the future we will start them,

Experts predict rising wheat prices, Export quotes reached the maximum level of the 2019/20 season !!!

IN THE SECOND HALF OF THE SEASON, GRAIN EXPORTS SHOULD INTENSIFY

Export quotes for Russian wheat with a protein of 12.5% ​​on the basis of FOB Novorossiysk rose by January 10 to the maximum level in the 2019/20 season and on average exceeded $ 220 / t, the agency Refinitiv Agriculture reported. At the end of 2019, according to him, average quotes were at the level of $ 217.5 / t. Reduced supply amid a strong ruble and limited domestic sales support prices. Exporters take a wait-and-see attitude and are not in a hurry with sales, counting on a further increase in prices, which is also associated with the geopolitical situation in the Middle East, analysts say.
The short-term strengthening of world wheat prices, as well as their increase in the Russian market, will also be facilitated by an increase in procurement prices from Egypt, the Agroanalytic Center of the Ministry of Agriculture believes. At the last tender on January 8, the Egyptian state agency GASC purchased 300 thousand tons of wheat with delivery February 18-29. Including two lots were purchased (120 thousand tons) from Russia at $ 245.45 / t C&F ($ 231.95 / t FOB with freight $ 13.5 / t) and $ 245.98 / t C&F ($ 232.48 / t FOB Freight $ 13.5 / t). Compared with the previous tender in December, when 115 thousand tons of Russian wheat were purchased, its average price on the basis of FOB increased by $ 8.8 / t, the center compares.
Russian wheat did rise in price, but not at the same time, but in fact within a month, since the previous Egyptian tender took place on December 10, the head of the grain direction of the Agricultural Market Research Institute ( IKAR) draws attention) Oleg Sukhanov. “If you subtract the costs of storage and financing, then in their pure form prices increased by $ 5 per ton,” he commented to “ Agroinvestor“.
Since mid-December, there has been an active increase in prices for both Russian wheat and wheat from competing countries: France, the USA, Ukraine, Romania, Argentina, the head of the Rusagrotrans analytical center confirms»Igor Pavensky. “Quotes for February by the end of 2019 reached $ 220 per ton, which we predicted at the end of October,” he says. Given that the additional costs at GASC are about $ 9-10 per ton, and at the end of February Russian wheat was sold at a bid of $ 232 per ton at a tender, we can talk about the market price of $ 222 / ton, he estimates.
“According to our estimates, the value of Russian wheat (FOB Black Sea) has really increased: on December 30 it amounted to $ 220 / t, now it is at the level of $ 222 / t,” confirms the general director of the analytical company ProZerno»Vladimir Petrichenko. “The Egyptian tender, in fact, is the pulse of the market: it only confirmed the rise in wheat prices in the Black Sea region.” According to him, the main factor in the increase in prices is a steady demand for grain, despite the fact that their stocks at the main exporters are lower than last year.
Sukhanov says that rising wheat prices are due to several factors. “Firstly, supply prices have increased significantly – by the way, if they were lower, then the Egyptians would buy more wheat from us: they bought five lots, two of which are Russian, and the rest from Ukraine and Romania, which offered lower prices – he draws attention. – In addition, we have record low grain reserves in the South over the past five seasons. A strengthening ruble also forces exporters to raise FOB prices in order to earn some money, as farms do not lower prices and do not plan to. ” Sukhanov believes that this week we will see higher producer prices for wheat than in the second half of December.  
In addition, you need to understand that wheat will be shipped via the GASC tender in the second half of February, so the price for it is slightly higher than the spot, as if the grain was shipped immediately after the conclusion of the contract, he adds. There are many uncertainties on the world wheat market that are prerequisites for price increases: the situation with winter crops in the Northern Hemisphere, the geopolitical situation in the Middle East (the key market for grain supplies for Russia), the national currency exchange rate, etc., Sukhanov lists.
Prices also rose amid the expectation of the release of the US Department of Agriculture (USDA) report, in which traders expected to see a decrease in the estimate of stocks for all major agricultural crops, including wheat, corn and soybeans, continues to Pavensky. American analysts did reduce the forecast for world wheat reserves by about 1.4 million tons to 288 million tons, feed grain by almost 3.8 million tons to 327.7 million tons, including corn by 2.75 million tons to 297 , 8 million tons, barley – by 1 million tons to 20.97 million tons. “In addition, on January 15, the first phase of a trade deal between the US and China is expected to be signed, under which it is expected to increase imports of agricultural products from China, as well as cancel the planned increase in duties on imports of a number of goods by the United States and their partial reduction, ”adds Pave nsky.
According to Sukhanov, until the end of February, wheat prices will continue to strengthen, respectively, in the near future, exports will be quite active. “The further forecast will depend on what condition the winter crops will be at the end of winter, what areas will be allocated for spring crops , etc., ” he said.
Pavensky believes that further price increases may be limited – up to about $ 225 per ton. This is due to the fact that the export potential from the EU countries, in particular, France, Germany and others, is still quite high: out of 28 million tons of wheat, 13.4 million tons were exported in July-December 2019, he explains. In the coming months, the prospects for a new crop will already affect prices. “At the same time, except for GASC, the rest of the sales market for $ 222-223 per ton was not yet – this is the desired price,” the expert notes.
In the first half of the season, Russia exported slightly less grain than a year earlier, but the pace of shipments remained within the long-term average. “This guarantees an increase in the export of our grain in the second half of the season,” Petrichenko is sure.
Meanwhile, US Department of Agriculture Foreign Agricultural Servicein a January report, it lowered its forecast for wheat export from Russia in the 2019/20 season from 35 million tons to 34 million tons due to a decrease in the estimate of gross harvest from 74.5 million tons to 73.5 million tons. According to Rosstat, last year’s wheat crop amounted to 74.3 million tons in net weight, including 842.5 thousand tons of wheat collected in Crimea. American analysts traditionally do not take into account the region’s indicators as part of Russia. FAS USDA Feed Grain Export Forecast left unchanged – about 11.5 million tons.

Volga Baikal AGRO News Update ......

Agriculture News Russia and World Grain News !!!