January 17, 2012

Russian wheat prices climb on export-driven shortages 

As record export levels have lead to supply shortages in the south of the country, prices of domestic Russian wheat have risen over the past week, according to data from Moscow-based think tank SovEcon Monday (Jan 16).

Domestic prices for third-grade milling wheat rose 2.1% to RUB6,175 (US$193.83) a tonne for the week ended January 13, and fourth-grade milling wheat increased 1.7% to RUB6,000 (US$189.5) per tonne. Meanwhile, wheat flour also rose 1.7% to RUB8,950 (US$282.66) per tonne and feed wheat increased 2.3% to RUB5,450 (US$172.12) per tonne.

Dmitry Rylko, general director at the Institute for Agricultural Market Studies, or Ikar, said Monday that grain prices have increased because of shortages in South Russia, which have been caused by record exports.

"Domestic producers in the South of Russia are well armed with very strong prices and margins during July-December, and are not in hurry at all to sell their remaining stock, although it's quite limited," Rylko said.

Increased output in the Black Sea region has been making global export markets more competitive, with the USDA recently increasing its estimates for Russian production and exports.

The USDA Thursday increased its 2011-12 production estimate by almost a quarter of a million tonnes to 56.23 million tonnes, 35% higher than last year's drought hit output.

The USDA also said it thinks Russia will export 19.5 million tonnes of wheat in this crop year, which ends May 31, an increase of 0.5 million tonnes on its projection in December.

Russia exported 18 million tonnes of grain in the first half of the 2011-2012 marketing year, Agritel said, bringing US$4 billion to the country's economy.