Russian grain prices fall as southern port disruptions curb exports
Russian wheat and barley prices have fallen sharply as disruptions at southern ports restrict export sales during the harvest. Domestic pressure is rising while traders warn that prolonged corridor closures could reduce supplies to global buyers.
Port disruptions deepen domestic price decline
Wheat and barley prices on Russia’s domestic market fell by 8-14.5% between mid-July and the end of July as restrictions at Azov Sea ports disrupted grain intake and export shipments. Kommersant, citing ProZerno data, reported that third-class wheat in European Russia declined to 13,500 rubles per tonne for purchases from farms or elevators, while fourth-class wheat fell to 12,200 rubles.
The two wheat grades were respectively 17.8% and 20.1% cheaper than a year earlier, according to the figures published by Lenta.ru. Feed barley lost 18.7% year on year. Some producers were accepting only 8,000-9,000 rubles per tonne for wheat, compared with 14,000-15,000 rubles several weeks earlier. SovEcon estimates farmers’ break-even threshold at about 10,000 rubles per tonne.
Harvest supply meets weaker export demand
The domestic decline reflects an increase in available grain during the harvest and a sharp reduction in demand from exporters. Lenta.ru reported that most companies were experiencing sales problems: shipments continued mainly under forward contracts with the largest exporters, while other wheat, barley and pea volumes remained at elevators. Russia has exported about half of its wheat harvest and as much as one-quarter of its barley harvest in recent years.
In July, Russian wheat exports fell by about 20% year on year and barley exports by 80%, according to Lenta.ru. Business FM gave a broader decline of 17-83% for grain exports during the month. SovEcon director Andrey Sizov said the redirection of transport flows had increased grain vessel freight costs by 30-50%. Demand is also restrained among two leading buyers: Turkey has a large harvest, while Egypt holds substantial stocks.
Farm margins and global supply face pressure
Conditions are also deteriorating beyond southern Russia. In Siberia, where the wheat and barley harvest was only beginning, prices were already 10-15% below last year’s levels, Business FM reported. Producers face limited transport options, possible pressure from higher rail tariffs and competition for capacity at northern ports. A Rostov region farmer said queues at operating elevators could reach 300 trucks per day and warned that some farms lacked funds for future planting.
Sizov expects grain prices to continue declining in the coming weeks. The Institute for Agricultural Market Studies forecasts that Russian wheat exports will fall by 32-43% in August. The Russian Union of Grain Exporters and Producers has warned that a complete blockage of Black Sea corridors could prevent shipment of 30-35 million tonnes of wheat, equivalent to about 15% of global wheat trade. The group says other exporters would be unable to replace the entire shortfall, increasing risks for import-dependent markets in Africa and the Middle East.
