IKAR in Mass and Industry Media

RUSSIAN WHEAT EXPORTERS SEEN PRESSING FARMERS TO DOWNGRADE PRICES

Reuters

MOSCOW: Russian wheat exporters are putting pressure on farmers to reduce domestic prices in response to the strengthening rouble, which makes Russia, a major wheat exporter, less competitive on the global market, analysts said on Monday.

Domestic prices in rouble terms are already declining in Russia's southern regions but that does not offset the two percent growth of the rouble currency against the dollar last week.

Black Sea prices for Russian wheat with 12.5 percent protein content were at $184 a tonne on a free-on-board (FOB) basis at the end of last week, up $4.5 compared with a week earlier, Russian agricultural consultancy SovEcon said.

"Amid the rouble growth and slow decline in the domestic prices, exporters have to increase prices for the Russian wheat," it added.

The effect of the stronger currency may, however, be partially offset in the near future as domestic farmers need to get rid of their stock and get cash for the spring sowing, according to SovEcon.

Russia exported 26.0 million tonnes of grains, including 19.2 million tonnes of wheat, between July 1 and March 9, the agriculture ministry said. The pace of grain exports was up 3 percent year on year.

Domestic prices for third-class wheat fell 125 roubles compared with the end of the previous week to 11,175 roubles ($159) a tonne in the European part of Russia on an ex-works basis, according to SovEcon. Ex-works supply does not include delivery costs.

The spring grain sowing campaign is running faster than last year with 547,000 hectares already sown, up from 167,000 hectares at the same time a year ago. The weather remains favourable and warmer than usual for this time of year in many regions, SovEcon added.

Russia's winter grains are in a better condition than at the end of November, the state weather forecaster Hydrometcentre said last week. However, the condition of winter grains remains poor in Belgorod and Voronezh regions in the central part of Russia.

SovEcon also said average prices for sunflower seeds were down 100 roubles at 26,000 roubles a tonne. Domestic sunflower oil prices fell 1,575 roubles to 55,750 roubles a tonne, while FOB Black Sea export prices were flat at $750 a tonne.

IKAR, another agriculture consultancy, said its white sugar price index for southern Russia was at $575 a tonne at the end of last week, up $10 from a week earlier.

21.03.16

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