January 26, 2012

Russian wheat export drops in South, prices hike

The milling wheat stocks available for export from Russia's Southern Federal District dropped, pushing up prices, stated the Institute for Agricultural Market Studies.

"We see a stormy price increase because grain resources are becoming limited in the south," said Oleg Sukhanov, the institute's grain analyst. "This forced exporters to search for grain in other regions, including central Russia, Volga, Ural areas and Siberia."

Free-on-board prices at the Black Sea port of Novorossiysk rose 6% to US$260 a tonne over the first 20 days of January, the institute, known as Ikar, said.

Higher transportation costs for grains brought to port from more distant areas are driving up prices for fourth-grade milling wheat, Russia's main export grain, Sukhanov said. That's contributing to an increase in global wheat prices, he added. Wheat futures rose 2.1% to US$6.1725 a bushel on the CBOT in the past week.

Russia exported more than 19 million tonnes of grain, including 15 million tonnes of wheat, from the start of the marketing year on July 1 to January 20, according to the institute.

In 2011, Russia harvested 93.9 million tonnes of grains after drying and cleaning, according to Agriculture Ministry data. This year, the crop may be at least 90 million tonnes, according to Sukhanov.