Demand for Russian wheat slows amid competition from Argentina, Australia: traders

Wheat traders from Russia, the world's largest exporter of the grain, have been losing market share in North Africa, where cheaper offers are available from Argentina and Australia, market participants said Jan. 16.

"I have not heard anyone buying [Russian wheat], as Argentina is cheaper," a trader said, with other sources saying traders were pressuring the market.

Russian wheat flows have instead turned to focus on more traditional export markets, such as Egypt, sources said.

"[Russia] only has 10 million mt to export [before the end of the marketing year on Jun. 30], so don't need to be competitive everywhere," the same trader said. "It has been a very slow start of the year."

The pace of exports from Russiahas slowed significantly in recent weeks. Russia-focused agriculture consultancy Sovecon expects Russian wheat exports in January at 1.8-2.2 million mt, significantly lower than the 3.6 million mt exported in January 2023.

During the first two weeks of January, Russia shipped 0.9 million mt of wheat, down from 1.4 million mt in the same period in 2024, according to Sovecon data.

One driver for the slowdown in exports has been Russia's limited wheat imports for the first few months of the marketing year. In recent years, low imports has resulted in a concentration of exports in the first months of the marketing year.

Russia set on Dec. 20, 2024, its quota for wheat exports at 10.6 million mt for Feb. 15-June 30, 2025. The previous quota for February-June 2024 was set at 28 million mt, without a specific breakdown for different grains. This year's export quota has been set at zero for other grains.

Russia's export tax is also high. The Russian agriculture ministry has set its variable export tax for wheat from Jan. 15 at Rb4,245/mt.

The export duty is calculated as a percentage of the difference between a base price and the average export prices on a FOB basis during the 60 days preceding the day of calculation. For the latest calculation, that average is $240.20/mt.

For each year since the 2022-2023 marketing year, Russia's wheat production has exceeded 90 million mt, and exports have been above 48 million mt, according to US Department of Agriculture data.

Platts, part of S&P Global Energy, assessed Russian 12.5% wheat prices at $236/mt on Jan. 16, down $1 on the week.

Looking ahead, sources expect export activity to pick up in March.