Drought in Russia: Grain region particularly affected
In Russia, the main region for grain cultivation has been experiencing dry conditions for weeks. This is likely to result in lower yields and poorer quality than previously expected.
Russia's wheat exporters have had a tough season behind them. Experts estimate that in 2024/25, around 41 million tons of wheat were exported, which is a decrease of over 20% compared to the previous year.
The pessimistic outlook for Russian wheat exports in the 2024/25 fiscal year is likely to come true. Several market experts have confirmed to the newspaper "Kommersant" their concerns that there will be a decrease of more than 20% compared to the previous year.
While wheat exports in 2023/24 amounted to 54.1 million tons, the logistics company Rusagrotrans expects only 41.5 million tons for the current fiscal year ending on June 30. The analysis center Sovecon is even more pessimistic, projecting 40.9 million tons.
Wheat exports down by 40%
Russia's wheat export business has recently suffered mainly due to low profitability. Dmitry Krasnov, the director of the Reksoft Consulting competence center, pointed out to Kommersant that wheat exports from January to April 2025 had dropped by 40% compared to the same period last year. In March and April, a 60% decrease was recorded.
According to Krasnov, this decline is primarily attributed to low wheat stocks in key export regions of Russia, caused by a relatively low harvest and high export volumes in the first half of the season.
New harvest on the global market cheaper than Russian
For Dmitri Rylko, the CEO of the Institute for Agricultural Market Studies (IKAR), the strengthening of the ruble is a key factor in the significant decline of wheat exports in the second half of the season. The drop in world market prices has also played a role.
Rylko highlighted that there is already a new wheat harvest from other countries on the market, selling on average $20 (€17.45) per ton cheaper than Russian wheat from the old harvest. The margins of wheat exporters have been negative for a long time; now they are around zero.
Global wheat expansion bad for Russia
According to Kommersant, leading analysts are optimistic for the upcoming fiscal year. Wheat exports of 42 to 45 million tons are expected. However, Sovecon anticipates only 40.8 million tons, showing little change from the current season.
Experts agree that the growth of global wheat production could negatively impact Russia's export business. An increase in harvest is expected in key export countries.