Countries are concerned with food security for the year ahead amid the pandemic, hence stockpiling wheat which is reflecting on its prices. This is causing exporting countries such as Russia  to introduce an export quota and taxes. While major importing countries like Egypt and Turkey see an expected increase in demand for wheat in the 2020-2021 year as the second wave of COVID spikes international tenders. 

Black Sea wheat prices experienced extreme volatility during 2020, reaching a six-year high at $258.50/mt on Oct. 23 and again on Dec. 27, and continued to push further at historically high levels while production reached near-record levels in Russia. Demand for wheat from elsewhere is expected to remain strong during the second half of the 2020-21 season (July 1-June 30), providing support to high prices.

Russia will start export quotas on grains and an export duty on wheat exports starting from Feb. 15, which will be a bullish factor to wheat prices in the Black Sea region. The export duty burden is expected to be split between Russian producers and importers; the main question is in what proportion to each party.

For the major importing countries of Black Sea wheat, including Egypt and Turkey, the US Department of Agriculture expects imports at 123.65 million mt in the 2020-21 marketing year (July 1-June 30), up 1.2% from 122.16 million mt in 2019-20. Sudden demand increases for wheat followed the second wave of the coronavirus pandemic has led to a spike in international tenders, further increasing demand.

Although growing conditions improved concerns over the 2021 production keep flying in the market. Increased demand from several states to ensure food security have been providing support to wheat prices in the Black Sea region. Also, dry weather during the winter planting season in Russia has created concerns over the 2021 wheat production level. As a result, prices soared to the initial six-year high at $257.25/mt on Oct. 23.