Volga Baikal AGRO NEWS Update on the Russian Agricultural Export !!!
Grain pours overseas: Wheat exports accelerate sharply in June !!!
The introduction of a floating duty instead of a fixed one spurred wheat exports from Russia. In the first half of June, shipments exceeded 1 million tons, surpassing the result of the whole of May, and by the end of the month they may reach a record 2.7 million tons for this period. So far, exporters have few contracts for the beginning of the new season, but analysts are expecting a resumption of buyers’ activity.
In the first half of June, Russia exported 1.13 million tonnes of grain, including 1.09 million tonnes of wheat, according to Sovecon’s review, citing data from the ports. For comparison: about 900 thousand tons of wheat were exported for the whole May. As a result, Sovekon predicts that by the end of June shipments may reach 2.7 million tons of grain, including 2.4 million tons of wheat. According to the director of Sovecon, Andrey Sizov, the export of wheat for this month in this case will become a record: the previous maximum – 2.15 million tons – was recorded in June 2018.
According to Rusagrotrans, since the beginning of June, 1.45 million tons of grain have been exported, including 1.34 million tons of wheat. The forecast for the whole month is 2.35-2.4 million tons of grain, including up to 2.3 million tons of wheat, says Igor Pavensky, head of the Rusagrotrans analytical center. He believes that in June shipments will exceed the export of wheat in the previous three months, when a total of 2.1 million tons were exported. From the beginning of the season to June 10, Russia exported 46 million tons of grain, including 35.5 million tons of wheat, excluding the EAEU, follows from the materials of the Ministry of Agriculture.
The reason for the intensification of shipments is a decrease in the export duty on wheat from € 50 per ton after the introduction of a floating rate from June 2, when the amount of the duty was set at $ 28.1 per ton. After that, the rate was increased several times, the size of the duty from June 23 – $ 38.1 per ton.
Chairman of the Board of the Union of Grain Exporters Eduard Zernin explains the acceleration of shipments in June by the delayed execution of old contracts. “On the eve of the introduction of the floating duty, when it became clear that its size would be below € 50, many began to conclude contracts for delivery in June,” he says. Andrey Sizov recalls that in May there was a surge in the purchasing activity of traders, after which there was a lull. In the second week of June, the demand for wheat in deep-water ports remained weak, and the average purchase prices fell from 15 thousand to 14.4-14.7 thousand rubles. per ton, writes “Sovekon”.
The situation in July, the first month of the new season, may turn out to be more difficult than in June, says Andrey Sizov. According to him, the indicative prices for Russian wheat $ 254.5 per tonne are lower than the cost of contracts for June-July $ 251 per tonne (FOB), therefore, the duty rate should be reduced. But, the expert continues, the pace of exports will also depend on the actions of farmers, many of whom hope for the abolition of duties and may hold back the grain. In general, he expects relatively low rates of grain exports in the first half of the new season. According to the results of the current season, Sovekon expects exports at the level of 49.8 million tons of grain, including 37.7 million tons of wheat.
As noted by Eduard Zernin, there are still few new contracts.
According to Igor Pavensky, exporters today strive to conclude contracts as late as possible in order to at least roughly understand the duty at the time of shipment, and the harvest will begin to enter the market only in July, and prices for wheat on the domestic market are decreasing following the cost of export contracts on the terms FOB. “A year ago, 2.9 million tons of wheat were exported in July, and 4.9 million tons in August. Therefore, after a possible recession this July, next month, traditional growth is possible, ”he says.
As noted by Mr. Pavensky, Egypt is likely to announce a new tender soon with delivery at the end of August-September. He adds that after a five-year hiatus, Algeria resumed the purchase of Russian wheat: the first batch of 28 thousand tons will be delivered in June.