IKAR in Mass and Industry Media

Russian grain prices rise mainly on gov't buying

Reuters

MOSCOW, Jan 12 (Reuters) - Russia's wheat export market reopened after a long New Year holiday on a much higher level than at the end of 2008, the Institute for Agricultural Market Studies (IKAR) said on Monday.

Standard wheat export price reached $185 per tonne FOB Novorossiisk. The main reason behind the rise is the growing role of the government intervention purchases.

As a result of the intervention, the market in southern Russia has switched to domestic sales from exports.

As neighbouring Ukraine concentrates on feed grain exports, there is no available food quality wheat on the market at prices comparable to Russian levels.

Therefore the international market will have to pay a premium to stimulate Russian players to return back to full scale exports.

Domestic prices are also touching new highs after the long holiday. IKAR believes that this week there will be another rise of at least $2-3 per tonne on all basic cereals.

The government has announced an increased intervention purchases. It has accredited another group of grain elevators with the total number now reaching 306 with a storage capacity of 9.4 million tonnes.

However, the gap between the volumes of purchased grain and grain delivered to accredited elevators and paid for is rising. IKAR therefore has serious doubts about the ambitious government plans to buy up to 20 million tonnes of grain.

Domestic sunseed export prices have stabilised at $610 per tonne, FOB Novorossiisk. There has been no market activity in Russia in the last 11 days due to the winter holidays, IKAR said.

It said at the start of trade on the domestic market after the holidays that white sugar prices reached 17,000 roubles per tonne in the benchmark Krasnodar region due to a weakening of the national currency.

In dollar terms prices declined to $555 per tonne from $562 in the end of 2008, due to the depreciation of the rouble

29.01.09

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