March 27, 2012
Russia's wheat prices down on menacing competition
As Russia's produce faces fierce competition from rival origins and the market anticipates a bumper upcoming crop, its wheat prices have fallen over the past week, according to data from Moscow-based think tank SovEcon.
Domestic prices for third-grade milling wheat fell 0.4% to RUB6,675 (US$227.70) a tonne for the week ended March 23, while fourth-grade milling wheat decreased 0.7% to RUB6,625 (US$229) per tonne. Meanwhile, wheat flour was down 0.3% to RUB9,350 (US$323) per tonne, while feed wheat stabilised at RUB6,250 (US$216) per tonne, SovEcon reported.
Such recent weakness is due to Russian wheat becoming increasingly uncompetitive against US and Argentinean origins, said Institute for Agricultural Market Studies general director Dmitry Rylko, while the market is also expecting imminent intervention sales. He added that the upcoming harvest is eagerly awaited, with high prospects for production levels.
Indeed, Paris-based farm adviser Agritel said Russian authorities seem confident about output potential for the upcoming campaign--despite some damages in the Krasnodar region--with negligible winter losses of up to 3% in the Moscow area.
Government projections for around 28 million tonnes of grain exports in 2011-12 are about to be realised, it added, as the body expects around 1.8 million tonnes to have left Russia in March, with shipments possibly exceeding two million tonnes a month from April onwards.
Deputy Prime Minister Viktor Zubkov said last week that Russia will not impose any restrictions on the export of grain as the country's carryover stocks and intervention fund will be able to provide all domestic needs, finally putting to rest concerns that duties could be introduced to combat supply shortages caused by record export levels.
IKAR is a consultancy engaged in analysis of the domestic Russian and global agricultural and food systems, according to its website. SovEcon specialises in agriculture markets research and consulting.
