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USDA report shows Russian wheat market expected to grow

Grains Market Focus: A Platts news and analysis feature

Assessment Rationale

November 10, 2016 - Russian deep sea wheat was increased by $0.25 at $182/mt due to a trade at $183.5/mt for February loading and bids at $181 for December loading. FOB Azov 12.5% protein was unchanged at $155.50/mt due to a lack of information disproving the previous assessment. CIF Marmara 13.5% was unchanged at $191/mt due to a lack of information disproving the previous assessment. Ukrainian corn was decreased by $2 to $168/mt due to a FOB Ukraine Panamax port bid at $167/mt and offer at $169/mt for December loading.

Market Commentary

November 10, 2016 - The milling wheat market grew stronger on November 10. Offers for 12.5% protein Russian wheat were heard at $183/mt, $1 higher than on November 9 and bids were heard at $181, also up $1 from November 9 levels as prices were pushed up by the results of GASC tender.

A deal was also heard done at $183.50/mt on a FOB basis for Russian 12.5% protein wheat for February loading and another two deals were heard done at $186.50/mt for April loading, maintaining the bullish trend on the Russian wheat market.

Traders say that Argentinian wheat is expected to come to the market in January- February and will create strong competition for Russian wheat, especially in Indonesia. Nevertheless, as the dollar firms against the ruble, Russian grains prices will become more competitive.

The USDA report was published November 9. According to the report the Russian wheat market is expected to grow. Wheat production for the 2016-17 marketing year is predicted to be 72 million mt, up 18% in comparison with the previous marketing year. Exports were expected to total 30 million mt , up 17% year on year at.

Meanwhile, Ukrainian wheat production is expected to be 1% lower year on year at 27 million mt and Ukrainian exports were reported at 15.5 million mt, down 11%. The decline in exports appears to be due to Ukrainian domestic logistical problems, market participants say.

Visit the Platts Black Sea grains price assessment page for related information

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