Wheat intrigue
Futures quotes on the exchange agricultural market were sluggish yesterday. Stagnation before the release (today) of the monthly balance of supply and demand from the US Department of Agriculture WASDE is quite traditional.
Most analysts do not expect a significant change in the balances of corn and soybeans by November. The probability of an increase in the expected volume of soybean oil exports from the USA is highly estimated.
Expectations for the trend for wheat vary greatly.
The intrigue remains over the harvest and possible export of wheat from Russia. In the November forecast, the harvest is fixed at 81.5 million tons, export - 48 million.
Russian experts and analysts allow for a decrease in the harvest to and even less than 80 million tons and export from 44 to 41 million tons, assessing the negative, for now, prospects for the harvest of winter wheat. However, formally, the reduction will be taken into account already in the 2025-2026 season. These figures should not affect production in the current one. But it will definitely affect the price movement. This is largely why delivery prices in Russian ports have increased slightly over the week (plus 1%), and in European and US ports by 2%. The gap is obviously connected with the slow recovery of the ruble exchange rate, making exports in foreign currency cheaper.
In Russia, export prices, arithmetically from tomorrow, will be affected by the increase in the export duty on wheat by 32% at once. It will now be more than 20% of the full price of grain loaded on board a ship (FOB).
To maintain the competitiveness of supply, the purchase price in Russian ports must decrease by the same 1,175 rubles per ton. It is not clear how to ensure this, given that the profitability of wheat exports was close to zero.
It will be difficult to get importers to increase demand prices by $12 per ton. The existing difference in supply prices of Russian wheat and other countries is canceled out by more expensive freight and difficulties with payment for the goods. A collapse of the ruble exchange rate by more than 10% to cover the gap should probably be excluded from the calculations or considered unlikely.
Partly for this reason (shipments are more difficult) Russian experts expect a decline in exports in December to 3.5 million tons against 4.6 million tons in November and 4.1 million tons last year. The estimate for January is even lower: 2.5-3 million tons.
A change in the practice of Egyptian imports, with the volume usually first/third in the world, may provide some way out of the impasse. For the season, imports are estimated at 11.2 million tons, 2% more than last year.
Information has been confirmed that now the Egyptian military agency Mostakbal Misr will organize the import of goods into the country, replacing the General Administration for the Supply of Goods (GASC).
In November, a tender announced by the Agency did not take place because exporters doubted the firmness of the decision made by the Egyptian government and the proposed conditions. Now, at least from the Russian Union of Grain Exporters and Processors, there is confirmation of readiness to cooperate with this agent.
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For now, there is information about the intention of the new general importer to work under "direct purchase agreements along with international tenders"
Perhaps that is why the first batch (63 thousand tons) of the 430 thousand tons of Russian wheat purchased by Egypt began to be loaded after an almost three-month delay.
The market expects to compensate for the undoubted loss of Russian export potential next year by an increase in exports from Argentina and Ukraine.
The Argentine Grain Exchange in Buenos Aires has increased its estimate of the wheat harvest to 18.6 million tons, since the harvest has already passed the middle of the campaign.
According to Argus Media, the wheat harvest in Ukraine in 2025 will reach 23.7 million tons, which will be 1.3 million tons higher than previous estimates.
This results in an addition to the global balance of 2.5 - 3.0 million tons. According to the figures, this is a complete coverage of the loss of Russian potential.
Therefore, the fresh WASDE indicators are interesting. We will try to analyze them tomorrow.
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