Russia awards exporters new wheat allocations for Feb 15-June 30

Russia's agriculture ministry released its wheat export allocations, setting limits on the volumes that each of the country's wheat exporters can ship out between Feb. 15 and the end of the marketing year June 30.

The total amount to be allocated was initially set at 10.6 million mt, but only 8.6 million mt were distributed among 219 companies. The allocations are based on each company's export share in the previous year -- as such, the leading exporters receive the largest share of the export quota.

The largest volume was allocated to Grain Grates, receiving 2.38 million mt. The second-largest allocation went to Aston Group at 991,167 mt, OZK Trading at 494,450 mt, Rodnye Polya at 404,150 mt, and Grain Service at 269,011 mt.

Russia's government capped the country's wheat exports at 10.6 million mt from Feb. 15-June 30, compared to 28 million mt of total grains for export last year. The current quota only applies to wheat, while there are zero quota allocations to barley, corn and rye.

Traders reacted by expecting a reduced allocation of the wheat volume of 8.6 million mt, as opposed to 10.6 million mt.

"It was expected that it would be lower, and it is," a Russian trader said.

Meanwhile, another trader expressed that the total allocation of 8.6 million mt might be excessive.

"There will not be enough wheat; I believe less than eight million will be exported [till June]," the trader said, highlighting a 2024-2025 crop that was affected by extreme weather conditions in early May.

On the demand side, buyers voiced similar concerns, questioning which countries the remaining 8.6 million mt will be directed to.

"I think 8.6 million mt seems too much volume for the Middle East and Africa, where Argentine wheat is still competing in West Africa," the buyer added.

Additionally, Russia's export quotas are part of the country's move to tighten control over the sector, following fear of domestic inflation, and come alongside the government's duty on exports, which the country recalculates weekly. For the Feb. 12-18 period, the duty stands at Rb3,984, up 1% week over week.

Russia is forecasted to export 44 million mt, down from 54.7 million mt year on year, with a much lower production at 81.6 million mt, down from 90.5 million mt year on year when the crop was impacted by frosts and droughts in early May.

Platts, part of S&P Global Commodity Insights, assessed the price of FOB Russian wheat at $244/mt Feb. 7, up $1/mt week over week.