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'Wrong' to believe that Russia is holding back on wheat exports

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It is the “wrong approach” to believe that Russia is holding back on wheat exports, veteran analyst Dmitry Rylko said, as the opening session of one of the biggest events in grains brought sparring between speakers.

 

Svetlana Malysh, Black Sea agriculture markets analyst at Refinitiv, opened the Global Grain Geneva conference by reporting industry remarks that Russian exporters had stepped back in the face of “stiff competition” with rival origins including notably neighbouring Ukraine.

 

“Ukraine has been actively selling wheat,” Ms Malysh said, noting that the country’s exports to Egypt had soared more than 400% year on year so far in 2019-20.

 

According to industry remarks, Russia had held back on shipments in the face of competition, which had earlier this year seen the premium of Russian 12.5% protein wheat over Ukrainian 11.5% supplies narrow to $1 per tonne, she said.

 

Russian wheat exports for 2019-20 (which started in July) up to November 7 stood at 15.8m tonnes, down 13% year on year, according to data from SovEcon.

 

Stocks signal

However, Mr Rylko, director general at Moscow-based analysis group Ikar, said that it was the “wrong approach” to believe that Russia had been holding back on wheat shipments.

 

“It is quite wrong that Russian is not exporting its wheat,” he told the conference.

 

“Russia’s export pace is totally adequate,” he said, adding that if anything the country had “over-exported, but not under-exported” in wheat.

 

The lower level of wheat inventories in Russia as of October 1, down some 8% year on year – a decline reflected in southern areas which are a key origin for exports - indicated that Russia was poised for a decline in shipments in 2019-20.

 

“When October stocks go down compared with the previous year, exports also go down,” he said.

 

“This year, wheat stocks are lower.”

 

He also noted that internal wheat prices were, unusually for this time of year, above export parity, meaning that it was unattractive for farmers to sell to shippers.

 

Export forecast

Mr Rylko estimated Russia’s total wheat exports in 2019-20 at 34.0m tonnes, including an estimated 1.0m tonnes of shipments to destinations such as Kazakhstan which will not show up in official data.

 

In 2018-19, the comparable figure was 36.2m tonnes.

 

The forecast 2.2m-tonne decline will come despite a harvest this year which was pegged by Ikar at 75.8m tonnes, up 3.7m tonnes year on year.

 

Exports last season had been boosted by strong carry-in stocks, he said.

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