IKAR in Mass and Industry Media

Drought concerns lift Russia wheat prices

Reuters

MOSCOW, May 21 (Reuters) - Russian wheat prices gained ground last week as concerns about the severity of a spring drought in key southern regions lifted global prices and as the weakening rouble boosted export profits in local currency terms, analysts said.

U.S wheat prices approached nine-month highs on Monday after dry weather stoked fears about losses in both the United States and Russia.

The drought may have inflicted irreversible damage on some of Russia's crop, and a government source told Reuters that the state may cut its 2012/13 grain crop forecast in May from the current 94 million tonnes.

"If there is no rain in the key regions in the next 1-2 weeks, Russia could miss significant parts (of the harvest)," SovEcon agricultural analysts said in a weekly note.

They noted that the purchase price of wheat with 11.5 percent protein content in Russian deep-water ports rose to 7,600 roubles-7,700 roubles ($240-$250) per tonne from 7,300-7,500 roubles per tonne in the previous week on a carriage-paid-to (CPT) basis.

The Institute for Agriculture Market Studies (IKAR) said traders stopped quoting new prices at the end of the week because of the uncertainties.

Domestic prices remained unchanged as the government continued intervention sales.

Third class milling wheat held steady at 6,600 roubles per tonne, fourth class milling wheat was unchanged at 6,500 roubles per tonne while feed wheat remained at 6,150 roubles per tonne, SovEcon wrote.

However, IKAR said it expected the government to put a halt to the sales as concerns about the drought grow.

Grain sales via intervention tenders reached 1.7 million tonnes last week, including 1.36 million tonnes of wheat, SovEcon said.

SovEcon said that sunseed prices rose 275 roubles to 14,075 roubles per tonne, while crude sunoil prices rose 625 roubles to 36,325 roubles per tonne.

02.06.12

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