Russian grain losing competitiveness against Ukrainian origin




Russian grain is losing the ability to compete with Ukrainian origin on the export market, as Ukrainian grain is traded at a significant discount, General Director of Russian office of Agrozan Commodities DMCC Sabina Sodikova said, Prime reports.

“Against the backdrop of a record grain harvest in Russia as well as the deterioration of quality of Russian grain this year (60% of food wheat in 2022 compared to 92% in 2021), Russian exporters have no ability to compete with Ukrainian origin, which is traded at low prices amid the unstable situation in the country”, – she believes.

According to her, in August, pace of grain export from Russia decreased compared to the same period last year, and most of the shipments were made under pre-sold contracts. Russian exporters do not have new contracts with delivery after the second half of September. Thus, S. Sodikova believes, "the higher price of grain combined with a large volume of production and Ukraine's export potential of 11-12 mln tonnes can squeeze out Russian exports until November-December".

“Buyers are just not ready to pay $20-30 more for Russian grain than for Ukrainian. Among other things, Turkey's increase in tariffs for the passage of cargo ships through the Bosphorus and the Dardanelles will further aggravate the situation for Russian exporters, who will be forced to include a higher freight in the prices”, – S. Sodikova said.

She added, that the sanctions burden on Russian food and fertilizers has not been lifted, as buyers cannot pay to the accounts of Russian exporters in Russian banks disconnected from the SWIFT system.