Export prices of wheat from Russia and Ukraine rose sharply Nov. 3, after futures contracts registered sharp gains early in the week amid supply concerns and strong demand from consumer countries.

FOB prices of Russia’s 12.5% wheat were assessed at $335/mt on Nov. 3, up $3.25 on the day, S&P Global Platts data showed. FOB prices for 11.5% Ukrainian wheat were assessed at $328/mt on Nov. 3, up $1.25.

Wheat prices rose across the board this week as adverse weather conditions and government interventions in the markets are seen tightening supplies globally and leading to a rally in demand from consuming countries, traders said.

Saudi Arabia, a key wheat importer, has bought 1.27 million mt of milling wheat in a deal that exceeded market expectations, according to traders. Egypt — the world’s largest importer — has also bought 180,000 mt, they added.

Concerns over the harvest in the US and expected tightness in supplies from Russia and Ukraine were also driving prices globally.

The US Department of Agriculture rated 45% of the winter wheat crop for marketing year 2021-22 (June-May) as “good-to-excellent” condition, down 1% from the week earlier.

Further, Ukraine’s decision to limit wheat exports in MY 2021-22 (July-June) at 25.3 million mt is also expected to tighten the market. Light showers in Ukraine this week left a significant portion of the crop too dry and was seen weighing on yield, Commodity Weather Group said in a Nov. 2 report.

A likely poor spring wheat harvest in Russia and rising export duties will add further tightness. Russia has increased export taxes on wheat by $2.90 from this week to $69.90/mt for the week of Nov. 3-9, according to a notification from the agricultural ministry Oct. 29. Russia introduced the floating rate in June, replacing the fixed rate mechanism of Eur50/mt ($58.78/mt). The duty is applied when the export price of wheat exceeds $200/mt and is calculated as 70% of the difference between the market price and that benchmark.

And while Chicago Board of Trade and Minneapolis Grain Exchange futures had rallied to multi-year highs early in the week, the rally appears to have slowed. The most-active CBOT wheat contract was 11.5 cents lower at $7.8025/bushel Nov. 3. The contract had temporarily traded above $8/bushel Nov. 2.

Hard red winter wheat on the Minneapolis Grains Exchange fell 13 cents to $7.90/bushel Nov. 3.

Source: Platts