IKAR in Mass and Industry Media

Ruble's Rally Cutting Russian Wheat Allure as Price Keep Rising

Bloomberg

A rally in the ruble is sending Russian wheat prices higher, reducing the appeal of the nation’s grain against supplies from neighboring Ukraine as well as European Union countries including France.

Russian wheat prices rose $6 a metric ton last week partly as the ruble strengthened and stockpiles in exporting regions were low, said Andrey Sizov Jr., managing director of consultants SovEcon in Moscow. That’s making the nation’s grain almost $9 a ton more expensive than Ukraine’s and more than $20 a ton higher than France’s.

The ruble strengthened 2.8 percent against the dollar last week as the Russian central bank kept interest rates unchanged for a sixth meeting. The gains meant the currency rose for a third consecutive month. The ruble also advanced as Brent crude oil moved closer to the $50 a barrel milestone.

“Russian wheat prices continue to climb amid stronger ruble, growing domestic market and low stock in export regions," Sizov said by e-mail last week. “We have enough stocks but delivering them to ports takes time while exporters have vessels approaching."

Russian wheat with 12.5 percent protein content rose to $195 a metric ton last week, according to SovEcon. The Moscow-based Institute for Agricultural Market Studies, or IKAR, assessed prices lower at $190 a ton for loading at the port of Novorossiysk. That matches the highest level this year, reached in the week ended April 22 and maintained since.

The gain in prices is making Russian wheat less attractive. In Ukraine, milling wheat with the same protein content was at $186.50 a ton on April 21, according to data from UkrAgroConsult compiled by Bloomberg.

In France, wheat with a minimum protein content of 11 percent for loading at the port of Rouen was at 152.50 euros ($176) a ton Monday, according to data from the Office National Interprofessionnel des Grandes Cultures.

Russian wheat prices are rising on signs traders are closing out bets on lower prices both in the Black and Azov Seas, Dmitry Rylko, a director at Ikar, said by e-mail last week. Prices are also rising as the ruble strengthens, he said.

04.05.16

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