Situation in Red Sea could provoke higher prices on grain market - analysts
MOSCOW. Jan 22 (Interfax) - Rusagrotrans analysts say that the aggravation of the situation in the Red Sea could provoke an increase in prices on the grain market, as the WTO said Monday that the volume of wheat transported through the Suez Canal had fallen 40% in the first half of January.
According to an analysis of trade flows from 2018 to 2020, up to 14% of the world's grain passed through the Suez Canal (estimated at about 65 million tonnes). This includes about 30% of Russian grain, mainly wheat and barley, the Rusagrotrans analytical center said. Exports go to countries in the Persian Gulf, Asia, and East Africa. Last season, shipment volumes totaled approximately 15 million tonnes; this season it could reach 18 million. The countries consuming primarily Russian wheat and barley are Saudi Arabia, Pakistan, Iran, Indonesia, Kenya, Yemen, Tanzania and Sudan. The route through the Suez Canal is vital to the supply of wheat from Russia to the poorest countries in Africa: Sudan, Somalia, Mozambique, Uganda and Eritrea, Rusagrotrans said.
"As the practice of recent years shows, during COVID-19, the slowdown and suspension of shipments led not only to increased logistics costs and prices for importing countries, but also to higher prices in exporting countries. It is possible that the situation in the Red Sea could also become a factor which will cause prices on the grain market to increase," the company said.
As reported, the situation in the Red Sea has worsened because of the Palestinian-Israeli conflict in the Gaza Strip. Yemen's Houthi rebel movement is firing at ships from a number of countries passing through the Red Sea as a show of support for the Palestinians. Meanwhile, Houthi representatives said they were ready to ensure safe navigation for ships from countries with no ties to Israel, including those from Russia and China.
Last week, export demand prices for Russian wheat (protein 12.5%) for delivery in February remained close to the level of the previous week at $240 per tonne (FOB). The price of American wheat fell $11 to $250 per tonne, French wheat dropped $6 to $237 per tonne and German wheat dropped $6 to $243 per tonne, Rusagrotrans said.
Last week, several countries held wheat-purchasing tenders. Egypt, Algeria, Jordan, Tunisia, Lebanon and Thailand immediately purchased 1.65 million tonnes of wheat. The Egyptian tender saw the purchases of 300,000 tonnes of Russian wheat at $265 and 60,000 tonnes of French wheat at $262.5 (FOB) per tonne. There were no offers of wheat from Romania or Bulgaria.