February 28, 2012

 

 

As Russian grain market discusses possible government intervention, its grain prices are likely to be held in check while ice in ports still hampers loadings, analysts said.

 

"Market participants continue to discuss the time of market interventions in the grain market. We believe that real sales can start not earlier than in the end of March," SovEcon analysts wrote in a weekly market roundup.

 

"We believe that interventions can be a catalyst for ending the uptrend on the market, given the large volume of government grain stock - 6.7 million tonnes," SovEcon added.

 

Wheat purchasing prices in Russian deep-water ports held at RUB8,400 (US$291) per tonne last week on a carriage paid to (CPT) basis, it said.

 

The Institute for Agricultural Market Studies (IKAR) pegged Russian Black Sea wheat export with 12.5% protein content at about US$280 per tonne, down US$1. Shallow-water ports have been totally frozen, standing idle without any activity, and so far there have been only rumours on forward deliveries not earlier than in mid-March, IKAR said.

 

It believes that the Russian Black Sea grain terminals functioned rather sporadically through the previous week due to bad weather.

 

As of February 20, Russia exported about 20.2 million tonnes of grain mainly through deep-water ports, implying just 350,000 tonnes were shipped during the week to February 20.

 

Average domestic EXW (ex-silo) prices for the third-grade milling wheat rose by RUB50 (US$1.73) to RUB6,725 (US$233) per tonne, fourth-grade prices gained RUB25 (US$0.86) to RUB6,700 (US$232) per tonne on EXW basis, Sovecon said.

 

US grain futures were mixed early on Monday as support from a weaker dollar against a basket of currencies was offset by higher oil prices and expectations of bumper US corn and wheat crops. CBOT March wheat was quoted down 0.7% by 1106 GMT to US$6.36-1/4 per bushel.

 

The most active May contract in Western Europe was down EUR2 (US$2.69) or 0.99% at EUR199.50 (US$268) a tonne. Russia will maintain export volumes of wheat and grain and may increase its grain output in 2012/13, while exports to Iran will continue until the government decides to ban them, Russian industry and government officials said last week.

 

The Government Trading Corporation of Iran (GTC) bought around 800,000 tonnes of wheat last week, trade sources said, breaking with the previous practice of wheat purchases through the private sector. The purchase included 500,000 tonnes from Russia.

 

But Russia will sit out early April deliveries to Egypt, whose General Authority for Supply Commodities, Russia's biggest buyer, took its business to US exporters instead.

 

On sunseeds, dollar nominated price index has slightly strengthened to US$369 per tonne from US$364, while in roubles, it edged down to 10,990 from 11,000, IKAR said. SovEcon believes that the average sunseed prices decreased by RUB175 (US$6.05) to RUB10,775 (US$372) per tonne.

 

SovEcon said the average crude sunoil prices fell by RUB175 (US$6.05) to RUB31,425 (US$1,086) per tonne while the market of the North Caucasus supported export prices, which rose to US$1,150 per tonne from US$1,100-1,120 per tonne on free on board (FOB) Black sea basis. IKAR believes crude sunoil price has moved to US$1,023 per tonne from US$1,010 per tonne.

 

Soy price index in the South of Russia slightly strengthened to US$504 per tonne from US$496 but remained unchanged in roubles at RUB15,000 (US$518) per tonne, IKAR said.