January 25, 2011

 

Grain prices rise further in Russia

 

 

The prices of grain rose in the European part of Russia last week, while Siberia's prices continue to decline, analysts said Monday (Jan 24).

 

SovEcon agricultural analysts said in a weekly note that in the European part of Russia milling rye added some RUB150 (US$5.02) per tonne to RUB7,350 (US$925.81) per tonne EXW, while other cereal prices rose RUB100 (US$12.6) per tonne on average.

 

In the southern part of Russia, third-grade milling wheat led the race, the Institute for Agricultural Market Studies (IKAR) said in a weekly note.

 

"We tend to associate it with generally rather scarce supply of high quality wheat in the south of Russia, and growing demand for wheat flour aimed at export markets, Azerbaijan first of all," IKAR said.

 

Third-grade wheat rose to US$228 per tonne from US$215 in southern Russia, fourth-grade to US$217 from US$205, feed wheat to US$207 from US$202, feed barley to US$283 from US$280, corn to US$289 from US$286.

 

"We observe Ukrainian corn in the Russian import pipelines, although still in modest quantities," IKAR said.

 

"There are reports that transnational traders have signed contracts to import barley and maize from Ukraine. But the actual shipments have not been confirmed due to export regulation problems in Ukraine. Traders price Ukrainian maize at US$260-$270 per tonne DAF," SovEcon said.

 

Analysts expect the Russian government to start selling its intervention stocks in February.

 

"The government plans to sell 500,000 tonnes of grain per month, including 400,000 tonnes of food grain and 100,000 tonnes of feed grain, selling a total of 2.5 million tonnes in five months," SovEcon said.

 

It expects the government to supply to the market 3.6 million tonnes of grain in February-June, including 1.1 million tonnes to Moscow, St Petersburg and drought-hit regions at a low fixed price.

 

SovEcon expects the sale of such a low volume will have a limited influence on prices.

 

"Many processors traditionally have low stocks after the New Year holidays. And they will not hurry to buy awaiting the intervention grain to arrive. However, any disruption or delay will raise demand and push prices sharply up," it said.