The world wheat market today has a unique situation, which has already brought Russia extra profits and gives the country good prospects. About it FBA “economy today” said the former deputy minister of agriculture and food, Doctor of Economic Sciences, Professor Leonid Kholod.
For the first time in ten years, the world risks losing Russian wheat, writes the American agency Bloomberg. The article notes: Moscow in March introduced export quotas for wheat in 7 million tons, which to 26 April already exhausted. And after the shipment of the last contracted party, the Russian Federation ceases to send grain to other countries. The exception was the four union states of the CIS, by which deliveries will continue.
At the same time, several states immediately plan to significantly increase their own grain reserves. For example, Egypt and Turkey - the largest traditional buyers of wheat from the Russian Federation. However, the quota set by Moscow will deprive them of their usual procurement market. However, these countries have already bought back their usual annual volumes and are now asking for additional.
“The situation on the wheat market is completely due to the crisis, which triggered the coronavirus pandemic, – notes Leonid Kholod. - In different countries there is an active reorientation of demand from expensive products to cheaper ones.. Amid falling incomes, people, relatively speaking, eat less caviar, but more bread. In Russia, the balance was hit - this year the country exported under 30 million tons, mainly exported wheat of the third class, which we don’t have much.
Besides, the depreciation of the ruble immediately added to the exporters revenue from each ton - these sales became super profitable, and exports began to grow. But the balance showed: at some point, sales must be stopped - Russia has domestic needs for grain, which must be satisfied in priority order. Then the quota was set, restrictive export”.
Other countries will compensate for the deficit
Russia in recent years is the largest supplier of wheat, leaving behind other world exporters. Bloomberg experts say: food shortages and price increases could threaten the world because of Russia’s withdrawal from the market. At the same time, some experts admit, that American or European suppliers can turn the tide to their advantage. Increased demand for grain is fixed quite stable.
The Ministry of Agriculture of Russia has established, that over quotas from the country, grain can not be exported to 30 June. Otherwise, the domestic market of the Russian Federation may face grain shortages and, Consequently, rising prices for it. Sales will resume only in July - it will be wheat of a new crop. The growing demand for Russian grain is also easily explained - due to the depreciation of the ruble, exporters can give discounts and still get higher profits.
“There is no need to talk about global wheat shortages due to Russia's temporary withdrawal from the export market. unknown, did Ukraine have grain stocks, but she regularly “breathes in the back” Russian export. Other countries have some potential.. The holy place will not remain empty - if Egypt or Turkey desperately need additional grain, they will get it. Let not from Russia.
Another question, how much they will give for this product - world importers therefore prefer Russian grain, what does it suit for the price ratio, quality and guaranteed delivery times. Russian exporters have already made considerable profits, and now the country will have to calculate the total reserves in June, take into account the volume of the new crop and only after that come up with a new offer for export. A new crop will go only in mid-July”, – He emphasizes the expert.
Russia will maintain market position
Only in the first twelve days of March in Russia was exported about 1,6 million tons of grain, including 1,25 million tons of wheat, What's on 40% exceeds last year's volume. At the rate “Rusagrotrans”, Russia's total export in the outgoing agricultural year will be 42,8 million tons including EAEU countries. At the same time, export prices for Russian wheat (protein 12,5%) in the first week of March decreased by $5 to $206 per ton. French milling wheat fell in price $7 to $206, Ukrainian – on $5 to $208,5, american – on $6 to $234.
At the same time, the purchase prices of Russian food wheat in deep-sea ports rose immediately by 1,1 thousand rubles to 14,1-14,3 thousand per ton amid weakening ruble. Many countries have suspended sales, expecting higher prices, but the internal Russian situation allowed exporters of the Russian Federation to continue trading with substantial benefit for themselves.
“The UN World Food Organization warned at the beginning of March, what world basic food needs, which is wheat, amid the crisis will only grow. Another question, that many countries simply don’t have enough money, to satisfy this demand, however, grain will be sold out faster in the coming years, what is produced. This is no doubt in anyone. So Russia has already begun to make money on the crisis, pandemic-induced.
While talking, that now the Russian Federation can oust competitors from the market - complete nonsense. The market looks back at the price and quality of grain, and who exactly offers it is not important. In July-August, the Russian Federation will enter the world grain market with a new crop and will confidently take its previous positions simply because, that I am ready to offer goods with maximum benefit. And all the other players again forced to squeeze simply because, that are not capable of price competition”, – concludes Leonid Kholod.
Max Boot
