IKAR in Mass and Industry Media

State purchases prop up Russian grain prices

Reuters

MOSCOW, Nov 17 (Reuters) - Russian grain export prices were flat to slightly lower in the last week, as government intervention tenders supported the market despite a drop in international price levels, analysts said on Monday.

Third-grade wheat for world markets fell on average $12 to $159 a tonne, ex-silo southern Russia, while fourth-grade wheat lost $6 to $124 a tonne, the Institute for Agricultural Market Studies (IKAR) said.

SovEcon agricultural analysts said Russian grain lost an average 100-150 roubles ($3.66-$5.49) in the last week.

Government intervention purchases since the start of the season have topped 1 million tonnes after the state bought 230,000 tonnes last week. It is now buying grain at three weekly sessions, up from two previously.

SovEcon said the gap between intervention purchases -- designed to support the market in terms of surplus -- and market prices was 20-30 percent, depending on the type of grain.

In 2005, the last year of intervention purchases, the difference was no more than 13 percent, although the surplus was not as great three years ago as now.

Russia expects to have harvested over 100 million tonnes of grain this year, at least 22 percent more than last year, and official estimates peg exports for the current season to June 30, 2009, at 20-25 million tonnes. SovEcon said exporters were buying Russian fourth-grade wheat at "risky" prices, in a range of 3,500-4,000 roubles ($128.1-$146.4) a tonne CPT. Fifth-grade was sold to exporters at 2,800-3,000 roubles ($102.4-$109.8), it said.

IKAR said fifth-grade wheat prices on international markets fell $5 to $109 a tonne ex-silo in the past week.

Sunseed purchase prices declined slightly to $202 a tonne, IKAR said, with no major purchase activity on the part of major crushers due to problems with liquidity.

"Processing plants are placing bids with payment postponements. Farmers aren't showing any interest, as they need cash," IKAR said.

Sugar millers last week raised white sugar prices to 15 roubles per kg, although the market was not ready for such an increase. Sales from mills were practically frozen, while traders sold at 14.0-14.2 roubles per kg, IKAR said.

29.12.08

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