IKAR in Mass and Industry Media

Russia's wheat price drop could make more exports possible

Reuters

MOSCOW, March 25 (Reuters) - Russian wheat prices have fallen to levels which could compete on world markets and exports could be renewed in the remaining three months of the crop year, analysts and traders said on Monday.

Russia was hit by drought last year, which slashed its crop, sent domestic wheat prices to record highs and quickly depleted its exportable surplus.

But the country's wheat prices have been falling since early February helped by sales from government grain stocks.

"Declining domestic wheat prices may provide another small window of opportunity for some exports later this season," Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), said in a note.

Russian wheat prices were estimated at $300 per tonne on a free-on-board (FOB) basis in the Azov Sea last week, while domestic prices were seen at $310 per tonne, IKAR said.

Global benchmark wheat futures fell on Monday on traders' expectations for larger crops this year to help ease tight supplies.

Chicago May wheat was quoted at $7.28-1/4 a bushel, while Paris May wheat was seen at 241.25 euros ($310) a tonne by 0935 GMT.

"If the domestic market continue to fall at the current pace, about 300,000-400,000 tonnes of wheat could be exported by the end of the season," one trader said.

"But in case domestic demand returns in April, these volumes will be used to cover domestic needs."

Since the start of 2012/13 marketing season on July 1, Russia has exported 14.05 million tonnes of grain, down from 21.85 million tonnes at the same date a year ago, the Agriculture Ministry said in a statement citing customs data.

For the first 20 days of March, the country exported slightly more than 200,000 tonnes of grain, excluding legumes, IKAR said.

Russia has sold about 2.4 million tonnes of grain from its stocks since the start of 2012/13 on July 1. It plans to sell an additional 2.1 million tonnes by the end of the season, slashing its stocks to about 300,000 tonnes.

The damage to Russia's 2012 crop generated a large premium for old-crop wheat supplies versus new crop. Russia's new-crop wheat prices were quoted at $260-$270 a tonne on a free-on-board (FOB) basis for deep-water ports last week, SovEcon agricultural analysts said on Monday.

As for other cereals, IKAR said maize (corn) exports could continue, supported by a surplus in Russia's South, the main supplier of the country's grain for export.

Purchase prices for maize in Russian ports were flat at 8,300-8,700 roubles per tonne on a carriage-paid to (CPT) basis last week, SovEcon said in a note.

The average domestic EXW (ex-silo) price in European Russia for milling wheat declined by 200 roubles to 10,550 roubles ($340) per tonne. Feed wheat lost 175 roubles and was seen at 10,275 roubles per tonne, SovEcon added.

Domestic barley prices fell 50 roubles to 8,675 roubles per tonne, while feed maize (corn) prices were down 125 roubles at 8,550 roubles per tonne. Rye prices were stable at 8,000 roubles per tonne, according to SovEcon.

Domestic prices for sunflower seeds were down 50 roubles at 16,225 roubles per tonne, Sovecon said. IKAR pegged it at 16,135 roubles per tonne, down 25 roubles.

Export prices for crude sunflower oil were down $10-20 at $1,110-1,120 a tonne on a free-on-board basis, SovEcon added, while IKAR quoted domestic crude sunoil price at 33,570 roubles per tonne, down 210 roubles.

Russia's domestic sugar prices rose by 400 roubles to 21,800 roubles per tonne or to $706 per tonne, up $8, IKAR added.

($1 = 30.8240 Russian roubles)
($1 = 0.7694 euros)

25.03.13

All viewing: 99
Discuss