22.
11.18
16:12

Russia Seeks New Markets (Part 1)

Russia, which has been the world's largest exporter of wheat for many years, is looking for new markets, which can break the market shares of the European Union and the United States of America in their important target markets.
Should the Russian marketing campaigns in Iraq, Saudi Arabia and Algeria succeed, this would consolidate Russia's leading position in the wheat market in the Middle East and North Africa.
For wheat traders, price is the deciding factor when it comes to trades in international business. Against the background of a weakening world market economy, which is accompanied by falling crude oil prices, the price is particularly important.
Cheap oil is a key factor in Russia's grain production, as fuel is cheap and a low ruble exchange rate favors exports. Arab nations would shop at low crude oil prices. If the mentioned nations allow Russia as a wheat supplier, this would give the world market leader even more market share.
Iraq, the most important cereal market in the Middle East, traditionally buys in the US.Last week, the new Minister of Commerce announced that Russia would now also be admitted to the international bidding process. Russia has been bidding for this commitment for more than two years. Now that there has been a change of personnel in the decision-makers in Iraq, the way is clear for Russia. In December there will be a first trial delivery. In nine years, it could start right, if the quality requirements can be met.
So far, Russia's wheat has not had enough gluten to meet the high demands of Iraqi customers. But Russian wheat is 10 to 12 USD / t cheaper than the US Hard Red Winter wheat (HRW). But that could make up for the US through cheap financing offers.
Although price and quality are the main arguments in the negotiations for grain deliveries, sometimes political reasons also play a role. Thus, Allied nations are preferred in doubt.

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