The pace of Russian wheat exports has dramatically recovered through the latter stages of 2022, to stand 15% ahead compared to the same period in 2021 as the country tapped into new destinations as the world’s cheapest origin, Fastmarkets Agriculture analysis of export data shows.
The slow pace of exports in the first months following the Russian invasion of Ukraine was associated with international sanctions and the fear of reputational risks by importers, but with the signing of the grain corridor deal and with its biggest-ever wheat harvest, Russia has finally managed to overtake last year’s export pace by 15%.
Since the beginning of the 2022-23 season in July through to December, Russia exported 24.9 million tonnes of wheat, 3.2 million tonnes more than a year ago at the same stage.
The main markets remained the same, although they showed a decrease compared to last year as major buyers bought smaller volumes because of the higher prices. Although, the field of customers diversified.
Turkey was the leading buyer with 4.7 million tonnes imported, down 15% versus last year, followed by Iran with 3.5 million tonnes, which is 30% less.
Egypt, however, increased its supplies by 13% to 3.5 million tonnes.
At the same time, Russia actively expanded the geography of deliveries, and some countries in the Middle East and Latin America have already bought volumes of wheat that have matched or exceeded volumes in any of the previous seasons. Saudi Arabia, Algeria, Pakistan, Brazil, and Mexico are among these countries.
In addition, after ten years, deliveries to Iraq resumed.
Russia has harvested a record-breaking wheat crop of 105 million tonnes in bulk weight. Its officials have also said that they expect some additional million tonnes of grains to be added to the balance from the currently occupied Ukrainian territories.
Thus local industry experts peg the export potential at up to 44 million tonnes – meaning Russia will need to maintain this pace and its competitiveness for months ahead.
As the war started in the early months of 2022, it was followed by sanctions and concerns. In the latter months, greater clarity on how shipping movements are organized and insured has meant better fleet coverage. The Russian government has also improved its export tax scheme to give better transparency to buyers, allowing the export flow to slowly recover.
In addition, Russian wheat remains among the cheapest origins worldwide, despite the additional war risk premium paid for freight coverage, which also helps exports.
As such, countries that have only recently started buying Black Sea origins after relaxing their import specifications to fight the hike in prices have increased their purchasing from Russia.
Algeria is an example. It has quadrupled its deliveries, with 1 million tonnes imported to date.
Saudi Arabia has doubled its deliveries of Russian wheat to reach an imported volume of 640,000 tonnes.
Brazil imported 333,000 tonnes of Russian wheat, up by 12 times compared to last year amid the crop issues in Argentina and the US, which used to be its two main suppliers.
Other countries have followed the same pattern.
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