IKAR in Mass and Industry Media

Russian wheat prices higher

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Russian wheat prices are currently too high to compete with offers from France and the United States on most international markets, underscored by recent tender results, analysts said on Monday. Russia, one of the world's largest wheat exporters, usually ships grain to North Africa and the Middle East. But Russian wheat lost the last three tenders of one of its key clients - Egypt's state buyer GASC - and is now looking to smaller markets.

"Demand is supported mostly by Azeri buyers now," Dmitry Rylko, the head of Russian agriculture consultancy IKAR, said in a note. Previously strong exports have supported prices for Russia's wheat in the recent weeks, another agriculture consultancy, SovEcon, said, adding domestic prices were also boosted by the weakness of the local currency, the rouble, which is oscillating near all-time lows against the dollar.

Russia's grain exports hit a record high of 4.7 million tonnes in August as it harvests a near-record crop thanks to favourable weather. The country had exported 9.9 million tonnes of grains, including 8.6 million tonnes of wheat, between the start of the 2014/15 marketing year on July 1 and September 17, the Agriculture Ministry said in a note, citing customs data.

Exports were 26 percent higher than for the same period a year ago. The country exported 2.1 million tonnes of grains, including 1.7 million tonnes of wheat, so far in September. Grain stocks at farms and procurement and processing companies, excluding small farms, were up 19 percent from a year earlier to 39.4 million tonnes as of September 1, according to data from statistics service Rosstat.

To be competitive with the French and the US origins in Egypt's tenders, Russian prices for wheat with 12.5 percent protein content would have to decline to $230-231 per tonne from the current $240 per tonne, according to IKAR. Its quote on the current prices was on a free-on-board (FOB) basis seen in the Black Sea at the end of last week. Prices for barley were down $2 at $210 per tonne last week compared with a week earlier, while maize (corn) prices were at $168 per tonne, down from $175 per tonne, IKAR said. SovEcon pegged FOB prices for wheat in deep-water ports down $2.5 at $245.5 per tonne. "One can expect a further price decline amid lost competitiveness of Russia's wheat," SovEcon said.

IKAR added that sunseed prices were down $6 at $312 per tonne, while SovEcon pegged them at 11,800 roubles ($306), down 125 roubles. FOB crude sunoil prices were up $25 to reach $750 per tonne in the Black Sea, according to IKAR. SovEcon quoted them at $760 per tonne, up $10. IKAR expects Russia to harvest a record rapeseed crop of 1.6 million tonnes, up from 1.4 million tonnes a year ago. Soybean prices in Russia's south rose to 19,000-19,500 roubles per tonne, from 18,500-19,000 roubles, it added.

24.09.14

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