Russia is dumping on the grain market to increase pressure on competitors

The new marketing year on the wheat market began with a record supply, aggressive Russian policy and pressure on Ukraine and European traders.

Russia is trying to maintain its position as the main player in the agricultural market thanks to aggressive price dumping. This is reported by Latifundist.

USDA estimates wheat production in Russia at 83.5 million tons, and local analysts predict even 85 million tons. This week, Egypt purchased Russian wheat with a protein content of 12.5% ​​at $ 252 per ton CIF, and prices may drop to $ 247-250 in September. The weak ruble, zero export duty and dumping strategy give Moscow room to further increase its presence in the MENA and Southeast Asian markets, crowding out competitors.

The season promises to be difficult for Ukraine, even despite the forecasted harvest of 22 million tons – practically the same as last year. Export opportunities are limited by increased competition from the Russian Federation, a high harvest in the EU, tariff quotas and a deterioration in grain quality after the July rains. On a FOB POC basis, Ukrainian wheat with 12.5% ​​protein was offered for $250, but buyers are willing to pay no more than $242. In the 11.5% segment, the market is only offering $225 against sellers’ $238–240.

Demand in Egypt remains, but Ukrainian grain is increasingly inferior to Russian grain, which offers better quality at a similar price. The feed segment is under additional pressure: the difference between food and feed wheat has increased to $20 per ton. In the EU, demand is limited by its high domestic harvest and quotas: as of August 20, more than half of the permitted import volume has been used, and less than 240 thousand tons are available by the end of the year.

France is also regaining its position this year. The soft wheat harvest is estimated at 32.6–33 million tons, a quarter more than last year. This week, Egypt has already purchased up to 400,000 tons of French grain. However, export prospects remain uncertain: China is reducing purchases, Algeria is keeping a political distance from the French market, and the strengthening euro is making French wheat less competitive.

In general, the excess of global supply at the start of the season is putting pressure on prices. In the coming months, it is Russia, Ukraine and Black Sea suppliers that will determine the terms of the game, while Western Europe will be forced to be content with niche markets.

The day before, USM wrote that the Egyptian state grain buyer Future of Egypt agreed to purchase a large batch of wheat from France, as well as grain from Ukraine and Romania.