Russia's wheat shipments in April are on track to triple on the year and are well above the previous five-year average, according to line-up data and global trade data. Despite sanctions and some financial institutions and insurers' refusal to facilitate payments for Russian exports, milling wheat line-ups in Russia's ports total 3.15mn t for April so far, including 35 vessels scheduled to be loaded with a combined 456,800t later this month. This is more than triple the 801,900t shipped out in April 2021 and 23pc above the previous five-year average for April exports. Turkey and Iran are the main declared destinations for Russian wheat shipments in April, at 901,600t and 588,200t, respectively. But 1.4mn t of milling wheat lined up in Russian ports for April are bound for unknown destinations, accounting for 45pc of total volumes. This is significantly higher than 29pc of milling wheat shipments to unknown destinations in April 2021 and the previous five-year average of only 3pc. High global wheat prices are encouraging Russian exporters to sell, while a significant discount on Russian product relative to other origins is making it increasingly attractive to buyers. And Russia's wheat beginning stocks for the 2022-23 marketing year are pegged at 13mn t — an 11-year high — which is also motivating Russian exporters to sell off as much product as possible. Meanwhile, demand for Russian milling wheat on global markets remains high, according to market participants. The Argus-assessed Russian spot 12.5pc milling wheat contract closed on 19 April at $389.50/t fob Novorossiysk, up by $144.00/t on the year. But this was notably cheaper than that of competing origins — the midpoint for Romania's spot 12.5pc wheat contract was heard at about $425/t fob Constanta/Varna/Burgas on 19 April. Russian wheat is also more competitively priced at international milling wheat tenders. Egypt's GASC booked French, Bulgarian and Russian wheat in its latest tender on 13 April for shipment in May-June. Russian wheat was offered at $460/t cfr Egypt — at a $20/t discount to Bulgarian product and at a $34.25/t discount to French product on a cfr Egypt basis.
2022-23 outlook
A resolution or escalation of the Russia-Ukraine war would affect Russia's wheat export prospects in the 2022-23 marketing year. That said, a number of factors could accelerate the country's export pace in the upcoming season. First, Russia's 2022-23 winter wheat crop is reported to be in an excellent condition, according to Argus' agricultural analytics arm, Agritel. Conservative estimates for Russian 2022-23 milling wheat production are pegged at about 85mn t, but it could reach nearly 90mn t — an all-time high — if crop yields approach record levels. Second, India — which has been exporting record wheat volumes in the past couple of months — faces a possible drop in next season's production because of drought. The US Department of Agriculture's Foreign Agricultural Service's 2022-23 production estimate of 110mn t of Indian wheat seems increasingly unrealistic, with Agritel pegging the country's output at 105mn t. Other recent estimates have been as low as 95mn t. The US' winter wheat crop conditions are also worrying for global supply and prices in 2022-23, with the US winter wheat crop index at its lowest in more than 20 years. Ample supply of high-quality Russian wheat, against a backdrop of reduced supplies from other origins and rising prices, are likely to further boost the country's exports in 2022-23, regardless of political controversy. Global importers will have to buy wheat in a context of high global prices, making more competitively priced Russian product all the more attractive.