Russian wheat prices hit new high despite government sales

Russian Wheat Prices
The Russian government sold 82,985 tonnes of grain

October 31, 2012: Russian domestic wheat prices rose last week to a new high despite sales from government intervention stocks last week aimed at steadying markets in the drought-hit country, SovEcon agricultural analysts said in a note on Monday. Last week Russia, one of the world’s top wheat exporters, began wheat stock sales to help curb food inflation, but traders and analysts said this would not be enough to lower domestic prices, predicting more action would be needed.

The Russian government sold 82,985 tonnes of grain from its stocks during the first two intervention tenders in its Urals, Siberia and Far East regions last week and then decided to expand sales to all regions of the country. It also raised the limit for this year’s sales to 130,000 tonnes per week from 110,000 tonnes, which means that the country will be able to sell up to 1.25 million tonnes of grain from its 5-million-tonne stocks by the end of the year.

Hot and dry weather slashed Russia’s wheat harvest by a third this year, adding support to rising global and domestic prices. Russia’s average domestic EXW (ex-silo) prices for third-grade wheat rose 75 roubles to 9,900 roubles ($320) per tonne last week, which was a new record level in rouble terms. Prices for fourth-grade milling wheat were up 25 roubles at 9,825 per tonnes, SovEcon said.

Prices for fifth-grade milling wheat increased 50 roubles to 9,450 roubles per tonne last week, it added. The strongest growth continued in Russia’s Central region, where prices rose by 100-200 roubles per tonne, while prices in Siberia and Urals were stable. Russian wheat export prices rose by about 40 percent between June and September but have fallen since early October, reaching a competitive level last week.

The purchase price of fourth-grade milling wheat in Russian deep-water ports decreased slightly to 10,500-10,800 roubles ($330-$340) per tonne last week from 10,500-10,900 roubles per tonne on a carriage-paid-to (CPT) basis, SovEcon added. Russian wheat export prices are now competitive with Paris benchmark January milling wheat, which was up 0.75 euro or 0.28 percent at 266.25 euros ($340) a tonne by 1007 GMT.

Prices in the Black Sea export ports were quoted at $340 per tonne with weak shipping activities, R ussia’s Institute for Agricultural Market Studies (IKAR) said on Monday. I t pegged prices for wheat with 13.5 percent protein content in shallow-water ports at $315-317 per tonne.

 

Courtesy: Reuters

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