MOSCOW: Domestic grain prices in Russia have plummeted by 36percent since June as a result of a halt in exports through the Black Sea and the Sea of Azov, Sovecon consultancy said on Friday, squeezing farmers’ margins as the new crop arrives on the market.
Both Russia and Ukraine have been pounding each other’s export terminals and grain carrying vessels in the Black Sea in an escalation that has created the biggest risks to the Black Sea trade in the 4 1/2 years of the war.
Russia, the world’s biggest wheat exporter, used to ship 70percent of its grain exports to major customers in the Middle East and Mediterranean through the Black Sea. The halt has created an oversupply in the domestic market.
“This is the lowest level for this time of year in at least five years,” said Sovecon’s Andrey Sizov, estimating that in dollar terms the price is around 20percent below the previous five-year low, set in 2023.
Russia is introducing an array of measures to support exports, such as rerouting trade flows and scrapping a grain export duty but farmers and markets are sceptical about the effectiveness of these measures.
Analysts estimate an oversupply of grain due to the export halt at between 20 and 25 million tons given Russia’s expected harvest this year at last year’s level of 140 million tons and projected export potential of 60 million tons.