IKAR in Mass and Industry Media

Russian wheat may stay competitive next week - analyst

Reuters

MOSCOW, Nov 2 (Reuters) - Russian wheat export prices may remain competitive with rivals next week, supported by possible demand from Egypt, the world's largest wheat importer, despite concerns that drought-hit Russia may have little grain to offer, analyst said on Friday.

"Russia may repeat its success during the next Egyptian tender, particularly, if European wheat prices remain at current levels," Andrei Sizov Jr., managing director at SovEcon agriculture analysts, told Reuters.

Russia, historically number three global wheat exporter, was hit by hot and dry weather this year, which slashed its wheat harvest and exportable surplus, underpinning global and domestic prices.

Russian wheat export prices rose by around 40 percent between June and September but have fallen since early October, returning the country to Egypt's list of attractive suppliers after less than a two-month pause.

Egypt bought 300,000 tonnes of wheat for shipment Dec. 21-31 this week, including 120,000 tonnes of Russian wheat at $356.50 per tonne with freight costs of $10.99.

The rest will be supplied by Romanian and French wheat, which was bought at $355.88 a tonne with freight costs of $10.75 and at $353.61 per tonne with freight costs of $13.88 respectively. Egypt's buyer GASC did not indicate whether it will announce another tender next week.

The purchase price of fourth-grade milling wheat in Russian deep-water ports were stable this week, at 10,500-10,800 roubles ($340-$350) per tonne on a carriage-paid-to (CPT) basis, SovEcon added in a note.

Benchmark January milling wheat on the Paris futures market traded up 0.25 euros or 0.09 percent at 268 euros ($350) a tonne b y 1323 GMT. The contract rose supported by tight supplies and a healthy export demand that will be further helped by a fall of the euro, traders said.

Russia has already exported around between 8.2 million tonnes and 8.3 million tonnes of wheat from July to the end of October, including 1.6-1.7 million tonnes in October.

Its 2012/13 overall grain exports will reach around 12 million tonnes by the end of November, which exceeds the official estimate of 10 million tonnes for this year's exportable grain surplus, according to SovEcon. The current 2012/13 marketing year started on July 1.

Traders have speculated for months that Russia may restrict exports, as it did in 2010, but Russian officials have said they would oppose any ban on grain exports.

Last week Russia began wheat sales from government stocks with the aim of decreasing domestic prices, but has had no luck so far, as the country's domestic wheat prices hit a new high.

Russia's average domestic EXW (ex-silo) prices for third-grade wheat rose 75 roubles to 9,975 roubles ($320) per tonne this week, which was a new record level in rouble terms. Prices for fourth-grade milling wheat were up 50 roubles at 9,875 per tonnes, SovEcon said.

Prices for fifth-grade milling wheat increased 50 roubles to 9,500 roubles per tonne this week, it added.

The Russian government sold 189,924 tonnes of grain during the first four intervention tenders this marketing year in Urals, Siberia and Far East regions and plans to allow buyers from all regions of the country to participate from next week.

Russia's 2012 wheat crop will lag official estimates by 6 percent and reach just over 37 million tonnes after adverse weather damaged this year's harvest, analysts said this week, compared to last year's outcome of 56.2 million tonnes.

The purchase price of maize (corn) in Russian deep-water ports was stable at 8,500-8,700 roubles per tonne on CPT basis this week, while free-on-board (FOB) basis prices rose $10 to $310 per tonne, SovEcon said.

For sunseeds, domestic prices rose 75 roubles to 16,975 per tonne. It pegged domestic prices for crude sunoil at 37,000 roubles per tonne, down 925 roubles.

($1 = 31.2975 Russian roubles)
($1 = 0.7730 euros)

02.11.12

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