Today's Paper Latest Elections Coronavirus 🔵 Covid Classroom Cooking Families Core values Story ideas iPad Weather Newsletters Obits Puzzles Archive
ADVERTISEMENT
story.lead_photo.caption A worker monitors as harvested wheat grain is unloaded into a truck during the summer harvest in July on a farm operated by Progress Agro in Ust-Labinsk, Russia. (Bloomberg News/Andrey Rudakov)

Russia looks set to cement its place as the dominant force in the wheat world.

In 20 years, Russia has gone from being reliant on wheat imports to accounting for a fifth of global sales, as its fertile soils generate bigger harvests at attractive prices. More than 100 nations from Egypt to the Philippines buy its grain, and Russia has sought to extend that list by adding markets where its wheat has been excluded because of rules over grain quality.

That ambition passed a milestone earlier this month when major buyer Algeria gave Russia the green light to step up shipments there. That followed a similar move last year from Saudi Arabia, another country that Russia has struggled to break into.

"You can see the staggering increase in both production and exports from Russia," said James Bolesworth, a director at U.K.-based adviser CRM AgriCommodities. "Russia has invested heavily in order to increase market share and it's still growing."

Algeria's state grains agency recently said it would start accepting wheat imports from all countries, including Russia, from its next tender. Until now, Russia has only been able to ship small amounts to the joint third-biggest buyer, which has required low levels of bug damage in cargoes.

While Russia's agricultural agency said it hasn't been informed of any changes yet, shippers have been invited to Algerian tenders and a French trader said the country may relax its bug rules. A trial shipment passed quality tests there earlier this year, although sales may take time to reach significant levels.

"It makes sense for import nations to open up access to a larger number of suppliers," said Andrew Whitelaw, who co-manages Australian consultant Thomas Elder Markets. "This will likely give them access to grain at cheaper levels in future."

As well as starting sales to Saudi Arabia this year after the kingdom relaxed bug-damage rules, Russia increased wheat exports to countries from Turkey to Brazil and Vietnam to Tanzania in recent years. Helped by its second-largest harvest ever, Russia is expected to ship out 37.5 million tons this season and reclaim its ranking as the world's top exporter.

Russia's cheap supplies have seen it grab export-market share from the U.S. to European Union in the past decade, dominating sales to countries like Egypt, where it has won 82% of tender purchases so far this season. Russian grain accounted for all cargoes bought in Egypt's latest tender on Tuesday.

More Russian sales to Algeria would be a blow to French shippers because the nation is their biggest customer, and France's exports outside the EU are already forecast to halve this season. Still, Russia could face more competition in the coming months from Canada and Australia, where harvests are increasing.

Russian farmers have come a long way since Soviet-era collectives gave way to private ownership of rich soils. They've used rising incomes to invest in fertilizers and top-of-the-line equipment to further boost output, and expanded storage to give them more control over holding onto grain for better prices.

"Their crops are so good they open new markets year after year," said Georgi Slavov, global head of fundamental research at London-based broker Marex Spectron. Russia's low supply-chain costs have helped to grab more business from suppliers like the U.S., he said.

ADVERTISEMENT

Sponsor Content

COMMENTS - It looks like you're using Internet Explorer, which isn't compatible with the Democrat-Gazette commenting system. You can join the discussion by using another browser, like Firefox or Google Chrome.
It looks like you're using Microsoft Edge. The Democrat-Gazette commenting system is more compatible with Firefox and Google Chrome.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT