London — Russian wheat prices are on course to hit new highs amid thin prompt supply, market sources said Thursday.
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A lack of wheat for spot or January shipments was driving the price increase as demand slowly returns to the market.
Wheat at port silos for January-loading windows was "mostly committed", while spare capacity was low, one source said.
The shortage led to a jump in 12.5% protein wheat January-loading prices this week. A trade was said to have been heard done at $235/mt Tuesday, followed by a $238/mt trade done late Wednesday.
Meanwhile, sellers looking to refill their silos were having to look beyond nearby farms to restock due to the lack of availability. That was adding a time lag and an additional logistical cost.
The lack of cargoes on offer for very prompt shipment could even see freight in the region move higher as some shipowners were considering whether to move vessels away from the Black Sea on a lack of available cargoes, sources said.
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Freight has been low in the region, hugging $16-$17/mt for spot routes between Novorossiisk, Russia, and Alexandria, Egypt, for example. Rates a month ago were over $18/mt, as seen in tenders from GASC -- Egypt's state grain authority -- for December delivery.
Similarly the 25,000 mt grains freight route from Nikolaev to Alexandria was assessed Wednesday at $16.50/mt by S&P Global Platts, down from $18.75/mt a month ago and $22.75/mt in October, which was the highest recorded in Platts data.
With demand for wheat now returning, most notably in GASC's 415,000 mt purchase Wednesday, prices were on course to surpass the $240.25/mt reached on December 17, which was the highest since February 2015.
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