IKAR in Mass and Industry Media

Russia's drop in wheat prices slows due to export demand

Reuters

MOSCOW, April 29 (Reuters) - A fall in Russian wheat prices has slowed after its exports regained competitiveness on global markets, analysts said on Monday.

Russia, historically the world's No.3 wheat exporter, was hit by a drought last year, which slashed its grain crop and quickly depleted its exportable surplus. But recent domestic price falls revived modest exports a few weeks ago.

"We observe some revival of wheat and maize (corn) export activity," Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), said in a note.

Analysts SovEcon said wheat export prices remained flat last week, while the number of buyers was rising. Exporters were buying milling wheat at 9,800 roubles ($310) per tonne for delivery to the Black Sea port of Novorossiisk, it added.

According to IKAR, the price of wheat with 13.5 percent protein content was quoted at $295-$297 per tonne on a free-on-board (FOB) basis in shallow-water ports of the Azov Sea last week.

SovEcon quoted prices for third-class wheat at 8,900-9,400 roubles ($280-$300) per tonne in shallow-water ports last week and for fourth-class wheat at 8,700-9,200 roubles per tonne. Maize (corn) prices were seen at 8,000-8,400 roubles per tonne.

Chicago Board of Trade July wheat rose 0.8 percent to $6.97-3/4 a bushel by 1129 GMT, while May milling wheat on the Paris futures was seen at 245.75 euros ($320).

To cover domestic demand before the cheaper new crop arrives this summer, Russia has imported more than 1.3 million tonnes of grain mainly from Kazakhstan and Belarus since the start of the season, IKAR added.

The government also has sold about 2.99 million tonnes of grain from its stocks since the start of the 2012/13 season on July 1. It still has grain stocks of about 1.8 million tonnes.

The country will cut the maximum weekly volume of sales starting in May to 90,000 tonnes from the current 130,000 tonnes, the Agriculture ministry said last week.

Russia is likely to export about 250,000 to 500,000 tonnes of wheat during May and June, despite low stocks, analysts and traders estimate.

In European Russia, the average domestic EXW (ex-silo) price for milling wheat declined by 150 roubles to 9,425 roubles per tonne last week, SovEcon added. Feed wheat lost 125 roubles and was seen at 9,125 roubles per tonne.

Barley prices fell by 75 roubles to 8,375 roubles per tonne, while feed maize prices were down 75 roubles at 8,200 roubles per tonne, according to SovEcon. Milling rye was quoted at 7,000 roubles per tonne, down 350 roubles.

As for oilseeds, the domestic prices for sunflower seeds were flat at 15,775 roubles per tonne, SovEcon said. IKAR pegged it at 15,750 roubles per tonne, down 5 roubles, or at $503 per tonne.

Export prices for crude sunflower oil were down $10 at $1,100 a tonne on a free-on-board basis, SovEcon added, while IKAR quoted domestic crude sunoil prices at 34,750 roubles per tonne, up 550 roubles.

Soybean price index in Russia's South rose to 19,300 roubles per tonne last week from 18,500 roubles per tonne. In dollar terms, it was up $33 at $616 per tonne.

Russia's domestic sugar prices were flat at 23,700 roubles per tonne, IKAR said.

Due to a lack of market activity and long national holidays in Russia in early May, SovEcon and IKAR plan to update grain prices on May 13.

($1 = 31.2412 Russian roubles)
($1 = 0.7676 euros)

29.04.13

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