Russian Wheat Exports Hit by Black Sea Supply Shock

Russian wheat export prices have risen in response to global market trends and a sharp decline in supply due to restrictions in the Azov-Black Sea basin. The supply shock is being felt globally, with analysts noting that world FOB prices are strengthening sharply amid extremely limited supply from Russia and Ukraine. Andrey Sizov, head of SovEcon consultancy, said 'the market is finally starting to seriously price in the Black Sea supply shock'.

The supply shortage has led to export prices for wheat increasing, with IKAR estimating that a ton of wheat with 12.5% protein content delivered from Novorossiysk is currently valued at USD210 FOB. SovEcon raised its estimate for August wheat exports to 2.0 million tons from 1.9 million, and provided an initial estimate for September: 1.8-2.3 million tons.

Wheat exports from Russia may remain at their lowest level since 2010 for the second month running, according to Sizov. Rusagrotrans also raised its estimate for August wheat exports to 2.0 million tons from 1.8 million. The sharp decline in supply is attributed to attacks on vessels and damage to terminals in the Azov-Black Sea basin.