May 31 2014, 10:08 Source: APK-Inform Views: 3731

Russian wheat flour export market - interim results of the season



In the recent few seasons the Russian wheat flour export market has been facing the difficulties. To date, the major ones are the end products shipments decrease on the foreign markets and importers' lower demand. There is the information about work conditions of the market participants and the prospects of market development in the current season.


In the beginning of 2013/14 MY the Russian wheat flour exporters faced the low demand of importers owing the market glut by the end products supplies. The expected decline of the flour offer prices, which is based on the grain new crop entering the market at lower prices, did not cause the intended effect. Indeed, besides the bearish trend, the demand of the Russian end products is still high. At the same time, the competition was rather severe. According to the market participants, as of September, 2013 in the South region the sales prices for the first grade baker's flour had totaled 300-340 USD/t FCA. In the West-Siberian region, the offer prices for the stated commodity were declared at the level of 310-340 USD/t FCA. Thus, under the conditions of non-competitive prices the new market for Russian exporters is out of the question.

“During the recent two seasons there was a decrease of the Russian export potential. Thus, unstable price situation, high prices for raw-materials and high competition, prevent the stated segment development”, declared the participant of the South region market.

At the same time, in November, 2013 the situation improved. The bearish trend faced on the domestic market positively influenced on the export direction. Thus, the prices decrease allows the Russian flour millers to compete on the foreign markets.The major countries-importers of wheat flour were Abkhazia, Mongolia, Tajikistan, Georgia, Korea, etc. In the period of November-December of 2013/14 MY Russia exported nearly 33 thsd tonnes of the end products, as opposed to the same rate of the previous season (16 thsd tonnes). The last one is the shipments' minimum rate in the recent three seasons. Unfortunately, there was a monthly decrease of flour export shipments, caused, first of all, by the prices growth for the milling grain and, as a consequence, for wheat flour. But, in February, 2014 the flour market faced the slump of prices based on the product prices decrease on the domestic market due to the low demand. Thus, the processors had to reduce commodity offer prices on the foreign market. Thus, in the South region of the country the offer prices for first grade baker's flour reached 306-330 USD/t FCA. Meanwhile, the flour millers of the West-Siberian region declared the offer prices for the first grade commodities at the range of 265-285 USD/t FCA. At the same time, the importers' demand was still rather low and flour was shipped through the previously accumulated sales channels.

Besides, most processors expected the export market situation to clarify in the end of the season. In the period of March-April, 2014 the milling wheat prices constant increase due to the limited offers caused the market participants' offer prices rise for the end products. Thus, the current situation caused the demand slumping for the Russian flour on the domestic market. At the same time, Russia decreased flour exports on the foreign markets as well. Thus, in April, 2014 in the South region the offer prices for the first grade flour totaled 327-363 USD/t FCA. Meanwhile, the export-oriented companies of the West-Siberian region declared the sales prices for the first grade baker's flour at the level of 310-358 USD/t FCA.

Thus, the current season has not been successful for wheat flour export segment in Russia. In the period of July-March, 2013/14 MY Russia exported 88.1 thsd tonnes of flour, as opposed to the rate of the same period of the previous season (259.7 thsd tonnes of end products). At the same time, in 2012/13 MY Russia exported nearly 75 thsd tonnes of wheat flour. Besides, despite the complicated conditions and rather low flour export rates, the Russian traders try to develop the export direction.

According to the forecasts of APK-Inform, in 2013/14 season wheat flour exports to reach the level of 120 thsd tonnes (98.7 thsd tonnes in 2012/13 and 310.8 thsd tonnes in 2011/12 MY).





“In the recent few seasons the Russian exporters have been unable to enter the new market due to the high prices for milling flour commodities. At the same time, the logistics problem is still important due to thework difficulties being annually caused. Thus, in the current season Russia has to concede the sales markets to competitors. But, all the flourproducers state that the next season will be more positive for the stated market segment”, declared the processor of the West-Siberia region.


PolinaKalaida, APK-Inform



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