High Supplies Cause Russian Wheat Price to Decline Amid Grain Trade Agreement Renews
- 17-Mar-2023 2:19 PM
- Journalist: Patricia Jose Perez
Russia: Large supply levels and negotiations in Geneva to renew a historic agreement permitting the secure grain export from Ukraine's Black Sea ports contributed to the sustained decline in Russian Wheat prices. On March 18, the United Nations-mediated Black Sea Grain Initiative is set to expire; however, Moscow has clarified that it will only agree to an extension if restrictions on its exports are eased.
When the Black Sea Grain Initiative ends later this week, traders will keep an eye on whether it is extended. Moscow offered to extend the deal for 60 days but has not yet received a reply from all parties in writing. The proposal has been met with opposition from Kyiv, which claims it is in violation of the general agreement. A 60-day extension would only be half as long as the initiative's two previous terms, which were negotiated by the UN and Turkey in July of last year and extended in November.
According to market research, the price of Russian Wheat with a 12.5% protein content delivered Free On Board (FOB) from Black Sea ports dropped by $1.9 to $289 per tonne. Against a backdrop of high production and relatively low demand, markets keep falling. The amount of Wheat that Russia shipped last week increased from 6,69,000 tonnes to 99,00,000 tonnes. Russia could export 4.1 million tonnes of Wheat by the end of March, up from 2 million tonnes a year earlier and the highest amount since March 2018. A few weeks ago, Russia's sowing operation got begun. Russia's southern regions, which are important Wheat-growing regions, have seen an improvement in weather circumstances for the crop.
As per the ChemAnalyst database, the price of Wheat is likely to decrease as several Wheat importers increase their supplies before the grain agreement expires. As per the market report, in a tender, Saudi Arabia purchased twice as much Wheat and Algeria joined the supply chain as well, and Tunisia participated in a contract to purchase almost 200,000 tonnes.