Platts Milling Wheat Marker at lowest since mid-Sept amid low demand

The Platts Milling Wheat Marker has fallen to its lowest level since mid-September, assessed at $227.50/mt for late-December to first-half January loadings on Dec. 1, as sellers increasingly lower their offers.

The MWM averaged $230.75/mt in November, down 25 cents/mt from October's average.

Launched in June, the MWM captures the price from the largest wheat export region, the Black Sea, and is set daily by the most competitive of the Russian 12.5% protein, normalized Ukrainian 11.5%, or CVB 12.5% FOB wheat price assessments. In November, the MWM was largely at parity with Russian wheat.

For December, Russian exporters are monitoring CPT prices, which have fallen to Rb15,000-16,000/mt, and the strength of the ruble -- currently around Rb77/$1 -- which has been a significant factor in slowing down the fall in export prices this season. The export tax has not been a determining factor this season, staying predominantly at low levels since July. The tax was set at just Rb8.9/mt for Dec. 2-9.

Russia exported around 5.5 million mt of wheat in November, up 200,000 mt from last year, according to Rusagrotrans estimates. The top destinations were Turkey (1.1 million mt), Iran (887,700 mt), Egypt (768,600 mt), Bangladesh (426,200 mt), and Saudi Arabia (195,700 mt).

Rusagrotrans also projected December exports would be 200,000 mt higher year on year to 4.3 million mt.

However, a second exporter expressed concerns about exporters' ability to achieve this target amid challenges in finding margins, suggesting that "exporters will likely bring less wheat to terminals."

Additionally, exporters are monitoring demand from East Africa, where bids were heard at $227/mt on Dec. 2. While demand remains steady, it is at relatively low levels, with buyers actively comparing prices with Australian, Argentine and Brazilian wheat.

"There is no real demand, and there are lots of sellers around," a third Russian exporter said.

A buyer in Bangladesh reported receiving Russian 12.5% offers at CFR $272/mt for January, compared to 11.5% Argentine offers at CFR $262/mt. "Black Sea will work most probably from April, after Argentina's wheat runs out. Right now, the difference is $10/mt. If [it falls to] $5/mt, buyers will go for Russian what over Argentine due to better quality," the buyer added.

Ukraine wheat at a premium to Russian wheat

The current Platts quality normalization premium added to Ukrainian 11.5% due to its lower protein content is $1.86/mt, based on the November monthly average. This premium has narrowed from over $3/mt in October, driven by tender short coverings for Algeria and Tunisia, including technical demand from some companies having payment issues regarding Russian wheat.

Exporters also added that expensive internal logistics due to war strikes were a factor, such as shortages of vehicles and drivers, damage to trucks, and regular electricity outages.

"Rail costs increased by 20-25% over the past month, while trucks by around 10%," one local trader explained. Another local broker said that the cost for a 600-kilometer truck trip is around Hryvnia 1,600/mt ($40/mt), compared to a rail wagon rental price of Hryvnia 2,000/mt.

As of Dec. 2, the Ukrainian 11.5% market traded at $227.50/mt for the first half of January, with feed prices offered at $225/mt. Sellers said high domestic prices meant buyers would pay more if they were short.

The top November buyers for Ukrainian wheat were Indonesia at 285,000 mt, Algeria (186,200 mt), Egypt (164,400 mt), Yemen (113,900 mt), and Lebanon (56,700 mt), totaling 1.07 million mt, according to lineup data from traders.

"The market is not on fire, [it is] more a structural demand and temporary support", one local seller said.

Romanian wheat goes mostly to Algeria in Nov

The FOB CVB 12.5% wheat was at a $3/mt premium to the MWM in November, while 11.5% protein was at a $1.6/mt premium.

Top buyers for Romanian wheat in November were Algeria (124,500 mt), Saudi Arabia (119,500 mt), Jordan (60,000 mt), Lebanon (58,800 mt), Bangladesh (57,700 mt), according to lineups from traders.

Total November exports stood at 627,470 mt, similar to last year, including the first 54,000 mt shipment to Indonesia after the phytosanitary agreement was signed in April.

"The demand is slow because some destinations prefer Russian wheat or are buying from Argentina because it is cheaper," a broker from Romania said, adding that there was some demand from Libya and Syria for CVB wheat as well.

Exporters noted that, overall, Romanian wheat remains competitive due to the freight advantage over Ukraine and Russia.