IKAR in Mass and Industry Media

Russia grants wheat from state stocks to Moscow

Business Recorder

Russia's government has approved the allocation of more than one third of state wheat stocks to the city of Moscow, the head of Russia's Grain Union said on Tuesday, a move that could put more pressure on domestic wheat prices. In an effort to curb food price inflation, the Russian government has been considering granting 400,000 tonnes of wheat to the capital with a population of 12 million in a rare move as it usually sells its stock at auctions.

"The decision is absurd," Interfax news agency quoted Arkady Zlochevsky, the head of the union, a farmers' lobby group, as telling reporters on the sidelines of a grain conference in Russia's southern city of Rostov-on-Don.

He confirmed the information to Reuters but declined to comment further.

The government will grant the wheat to Moscow's administration, which will then be able to sell it to local flour millers at below market prices, a move that would create unfair conditions for millers from other regions, Interfax quoted Zlochevsky as saying.

Russia's agriculture ministry declined to comment.

The government currently has 1.1 million tonnes of third-class and fourth-class wheat in stock. Grain stocks at Moscow's procurement and processing companies were down 31 percent from a year earlier to 75,500 tonnes at January 1.

Final official documents have yet to be signed, several industry sources told Reuters. However, some clients have already cancelled preliminary agreements with traders and expect volumes from the stock to be available in April.

"(Domestic) prices for wheat and for other grains may fall more significantly if the government starts to supply cheap wheat to Moscow," Dmitry Rylko, the head of IKAR agriculture consultancy, said.

Domestic prices for third-class wheat were down last week due to a stronger rouble, state export curbs and sales by farmers in need of cash.

27.03.15

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