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Russia has become the world’s leading wheat exporter: who are our main buyers and why grain prices have fallen

Date: June 25, 2024 Time: 12:09:51

Russia has become the leader in the wheat market.

Photo: Nikolay KHIZHNYAK

The Soviet Union was completely dependent on grain imports. In 1985, for example, the country had to buy 47 million tons. Fortunately, those times are a thing of the past. In recent years, Russia has become a major global producer and exporter of cereals. According to Rosstat, in 2022 the grain harvest in the country amounted to a record 153.8 million tons. This year, according to the forecasts of the Ministry of Agriculture, the figures will be more modest: 123 million tons, of which 78 million tons will be wheat. But this is still enough for our country to become the number one exporter.

This situation, of course, favors Russia: after all, increased exports bring additional income to the country. The head of the Ministry of Agriculture, Dmitry Patrushev, recently stated that the country has already supplied agricultural products abroad worth 28 billion dollars, 25% more than last year. On the other hand, as Bloomberg notes, “Russia’s overflowing grain bins and record Russian exports have sent grain prices tumbling to three-year lows.

And in fact, if in the spring of 2022 wheat exchange prices jumped to 13 dollars per bushel (a little more than 27.2 kg) and more, now it is trading at no more than 6 dollars. And this is the lowest price in the last three years. Why did grain prices suddenly drop this year? Can Russia, taking advantage of its position as a major producer, influence them?

“The sanctions policy puts quite serious pressure on prices, and they are falling,” Arkady Zlochevsky, president of the Russian Grain Union, said on Komsomolskaya Pravda radio. – Yes, we are the number one supplier in the world wheat market, but at the same time our share is 20%. If we had a stake greater than 50%, then everything would depend on us. But our 20% can be replaced. What our competitors are seriously working on. Why did prices start to drop last season? Because the prospects for a new harvest in the world have seriously increased. Global producers have increased cultivated area and investments in wheat production. And if it weren’t for the weather, which helped us this year, prices could have dropped even more.

According to Arkady Zlachevsky, currently the main buyers of Russian wheat are Egypt, Turkey, Saudi Arabia, Iran and Algeria.

Bloomberg, citing its own sources, claims that the Russian authorities are trying to introduce an unofficial limit on grain export prices, below which our companies are not recommended to sell them abroad. But the Ministry of Agriculture does not comment on this information, and the president of the board of directors of the Russian Union of Grain Exporters, Eduard Zernin, told the agency that Russian exporters respect their prices, which are dictated by the increase in production costs. Let us remember that this year in Russia wholesale fuel prices have increased considerably; The cost of diesel, for example, with which all agricultural machinery runs, increased by 50% during the summer months.

Cereal exports to the world market in the 2023/24 season, million tons (forecast)

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Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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