March 20, 2012

 

Russia's wheat export prices down

 

 

After Egypt bought US and Canadian supplies in tender, Russian export prices for benchmark wheat declined last week, while competition from neighbouring Kazakhstan added to the downward pressure on prices, analysts said on Monday (Mar 19).

 

Russian wheat with 12.5% protein content weakened to US$279 per tonne from US$281 on a free-on-board basis (FOB) in the port of Novorossiisk, the Institute for Agricultural Market Studies (IKAR) said.

 

SovEcon analysts wrote in a weekly market roundup that fourth-grade wheat purchase prices in Russian deep-water ports declined to RUB7,900 (US$271) to RUB8,100 (US$280) per tonne last week from RUB8,000 (US$275) to RUB8,200 (US$282) per tonne on a carriage-paid-to (CPT) basis.

 

IKAR said prices could weaken further, while SovEcon did not expect a surge in export demand for grain from southern Russia after shallow-water ports return to normal operations soon.

 

"Elevators near ports are already full of grain. Many large traders are still processing Kazakh wheat supplies," SovEcon added.

 

Russian average domestic prices for third-grade milling wheat lost RUB50 (US$1.72) to reach RUB6,700 (US$230) per tonne ex-works in European Russia. Fourth-grade prices were at RUB6,675 (US$229) per tonne ex-works last week, down RUB25 (US$0.86), SovEcon said.

 

The Russian government sees no need for grain export restrictions during the current crop year, which saw Russia emerge from a near-total ban to export record volumes, Russia's first deputy prime minister, Viktor Zubkov, said on Monday.

 

Grain exporters should feel free to contract volumes for April, May and June, he added. But Egypt, the world's largest wheat importer, last week bought 120,000 tonnes of Canadian and US wheat for May 1-10 shipment on a FOB basis. Russian wheat was not offered.

 

US CBOT May wheat slipped 1.0% to US$6.65-1/4 per bushel on Monday. The most active May contract in Western Europe was at EUR212.50 (US$280) a tonne, up 0.58%.

 

EU wheat exports will benefit little from rising world demand over the next five years as its shipments are curbed by growing use of cereals in bio fuels, limited production gains and competition from Black Sea exporters, an analyst of Strategie Grains said last week.

 

It projects soft wheat exports from Black Sea producers Russia, Ukraine and Kazakhstan will reach a combined 37 million tonnes in 2016/17, up about 68% from an average 22 million per year over 2005-2010.

 

For sunseeds, the domestic price index rose to US$376 per tonne from US$374 per tonne, IKAR said. SovEcon pegged it at RUB11,175 (US$380) per tonne, up RUB100 (US$3.43).

 

Crude sunoil prices slightly strengthened to RUB31,400 (US$1,078) per tonne from RUB30,900 (US$1,060) and to US$1,061 per tonne from US$1,042, IKAR said. SovEcon recorded them at RUB32,175 (US$1,104) per tonne, up RUB175 (US$6).