April 5, 2011

 

Russia's grain prices drop, tender values fall

 

 

The grain prices of Russia were on a continuous fall last week and buyers' interest towards intervention tenders has shrunk as prices recoil, analysts said Monday (Apr 4).

 

The government managed to sell just 6,480 tonnes of grain at the latest trade session on Thursday.

 

"The main reason buyers are losing interest towards tenders is that the market prices are now lower than the tender prices," SovEcon agricultural analysts said.

 

"The government is getting concerned about quickly shrinking domestic prices, the speed of which is getting beyond any imagination," the Institute of Agricultural Market Studies (IKAR) said.

 

Third-grade wheat in southern Russia declined to US$198 per tonne from US$215, fourth-grade to US$185 from US$198, feed wheat to US$178 from US$188, feed barley to US$271 from US$278, corn to US$292 from US$294, IKAR said.

 

SovEcon said feed barley led the race in the European part of Russia, having lost RUB450 (US$15.93) per tonne to RUB7,859 (US$277.61) per tonne EXW. Wheat lost RUB200-300 (US$7.06-$10.6) per tonne and corn RUB250 (US$8.83) on the average.

 

Market players do not expect exports to reopen in autumn and tend to get rid of grain immediately, IKAR said.

 

SovEcon said that the government plans to sell to regions 1.5 million tonnes of feed barley at a fixed price of RUB4,550 (US$160.72) per tonne and 980,000 tonnes of feed wheat at RUB4,200 (US$148.36), adding it did not expect quick implementation of this plan.

 

"We do not expect sales from the (government) intervention stocks to proceed smoothly," it said.

 

Also last week the government set support prices for intervention purchase tenders.

 

The starting price for benchmark third-grade milling wheat was set at RUB5,000 (US$176.62)  per tonne for the European part of Russia and at 4,700 tonnes for the Urals and the Asian part, the Agriculture Ministry said.

 

It said prices for the fourth-grade wheat were set at RUB4,650 (US$164.26) and RUB4,450 (US$157.19) per tonne, fifth-grade wheat at RUB4,300 (US$151.89) and RUB4,100 (US$144.83) per tonne.

 

Milling rye price was set at RUB3,900 (US$137.76) per tonne, feed barley at RUB4,000 (US$141.3) and corn at RUB4,400 (US$155.42) per tonne regardless of the region. All prices include a 10% value added tax.

 

"A decision on holding intervention tenders will be taken after the start of the grain harvesting campaign," they added.