Russian wheat export prices likely to rise further
September 11, 2012: Russian wheat export prices are expected to rise further this week, losing competitiveness on world markets, especially on the Egyptian import market, SovEcon agriculture analysts said on Monday. “The difference between Russian origin and European origin is almost depleted… Prices (for Russian wheat) may rise further this week,” Andrei Sizov Jr., managing director at the SovEcon consultancy, told Reuters.
Russia’s government is trying to cope with a drought that has slashed grain yields by more than a quarter. Officials are promising no grain export limits, yet industry experts believe they could occur as soon as October. Egypt, the world’s biggest wheat importer, bought an unusually large amount at a single tender on September 6, which traders said was probably because the country had wanted to stock up in case Russia imposes export restrictions.
Egypt’s General Authority for Supply Commodities (GASC) agreed to buy 300,000 tonnes of Russian wheat for $327.5-332.9 per tonne with freight of $11.48-11.97/tonne. Minimum offers for French wheat origin were at $334.8 per tonne with freight costs $4-5 more than for Russian origin, SovEcon added. The average Russian prices for fourth-grade milling wheat in deep-water ports rose 100 roubles to 9,700-9,900 roubles ($310) per tonne last week on a carriage-paid-to (CPT) basis, SovEcon said.
Dmitry Rylko, the head of the Institute for Agricultural Market Studies (IKAR), pegged Russia’s Black sea prices for 12.5-percent wheat at $319 per tonne last week, up from $313-315 per tonne on free-on-board (FOB) basis. Maize (corn) was estimated at $305 per tonne, Rylko added in a note. Chicago wheat prices rose for a third straight session on Monday on expectations Russia would soon announce export curbs and as adverse weather hit crops in major supplier Australia.
GASC Vice Chairman Nomani Nomani told Reuters after the purchase that rising prices of Russian wheat would make other origins more price competitive and said he wanted more clarity about how much Russian wheat would be available for export. Meanwhile, commodities trader Glencore agreed to ship 60,000 tonnes of Russian wheat to Egypt for November 1-10. Wheat prices in shallow-water ports reached 9,100-9,200 roubles per tonne last week, up 100 roubles, according to SovEcon.
Russia’s average domestic EXW prices for third-grade milling wheat were up 50 roubles at 8,350 roubles per tonne. Fourth-grade prices were also up 50 roubles at 8,325 roubles, SovEcon added. For sunseeds, the price index for the new harvest rose by 400 roubles to 16,400 roubles per tonne, according to IKAR. SovEcon saw it at 16,525 roubles per tonne, up 675 roubles.
Purchase prices in Russia’s South region were quoted at 17,500 roubles per tonne, IKAR added. Russia’s Krasnodar region, which is near the Black Sea export ports, expects to increase its sunseeds crop to 1.2 million tonnes from last year’s 1.06 million tonnes, Russia’s agriculture ministry said on its website www.mcx.ru. The region has already harvested 606,000 tonnes of sunseeds from 51 percent of sowed area with yields at 2.53 tonnes per hectare, the ministry added.
SovEcon expects Russia’s 2012/13 sunseeds crop at 7.5 million tonnes, down from last year’s 9.6 million tonnes. The crude sunoil price index rose to 41,000 roubles per tonne, up 2,000 roubles, IKAR said. SovEcon pegged domestic prices at 41,825 roubles per tonne, down 350 roubles, while Black Sea export prices rose to $1,250-1,260 per tonne from $1,220-1,230 per tonne on FOB basis. Domestic white sugar prices rose 1,000 roubles to 21,000 roubles per tonne and strengthened in dollar terms – to $652 per tonne, up $33.