Russia keeps its wheat at home, and the USDA still counts on it leaving

Russia harvested a normal wheat crop this summer, 88 Mt by the USDA's count, and it is keeping most of it at home. By the end of September only 6.4 Mt had sailed, about half the 12.35 Mt of an average start, and SovEcon puts October at 2.9 Mt against 5.4 a year earlier. The wheat has not gone anywhere else. The USDA has cut Russian exports from 47.5 to 40 Mt over three reports and sent almost all of it into stocks.

The ships are finding other ways out, slowly

Since strikes shut Russia's Azov terminals in mid-July, wheat has been moving through the Baltic and overland, and the monthly figure has crept up from 1.78 Mt in July to 2.10 in August and 2.52 in September. That is still only just over half a normal September. Moscow has now temporarily allowed ships to leave the Azov ports again, but it is too early to tell how much is actually sailing.

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The balance sheet keeps it in store

Rather than finding the missing exports another outlet, each report has written them into Russian stocks. The USDA's ending stocks have gone from 12.09 Mt in July to 19.09 Mt in October, the highest in over two decades, while consumption stays at 41.2 Mt and the crop has lost only 0.5 Mt. For importers, that is wheat that exists but that they cannot yet reach.

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Our reading: the season points below 40 Mt

With October counted, reaching the USDA's 40 Mt now takes close to 3.8 Mt a month from November to June. Russia has only held that pace across a whole season in its biggest export years, and last season it managed 3.5 over the same months. On what has sailed so far, we see the season landing between 31 and 38 Mt. The low end assumes the September and October pace holds, the high end that shipments return to a normal rhythm from November. The 40 Mt line sits above both, which leaves it relying on a recovery the ships have not shown yet. Three signals will show how this moves:

• The November WASDE. Another export cut sent into stocks would bring the balance closer to what is sailing. An unchanged 40 Mt would mean the USDA is counting on that recovery starting now.
• The Azov ports. If the temporary opening turns into steady loadings, monthly shipments can head back toward normal and the top of our range comes into play. If it closes again, the bottom does.
• November shipments. A month close to 3.8 Mt would put 40 Mt back within reach. Another month near 3 Mt would add to the stock instead.