April 6, 2006

Russia's grain prices start declining ahead of new harvest

Russia's domestic prices for grain have started on a downward trend as farmers increase sales before the harvest period.

Farmers usually increase sales at this time of the year, as conditions for grain storage at farms become more unsuitable. Moreover, farmers need cash to buy fuel, equipment and seeds for the spring planting.

Price declines were registered for all wheat grades.

Russia's grain prices increased earlier this year on fears of a smaller harvest due to a harsh winter. Considerable winterkills at the start of the year prompted the authorities to consider grain intervention sales on the domestic market, an unnecessary measure now that prices have gone down.

The drop in domestic prices will make Russian grain more competitive on the international market, and might result in an increase in exports in the coming months, authorities said.

Russia's grain exports during the first eight months of the 2005-2006 marketing year increase 68 percent to 10.1 million tonnes from 6 million tonnes in the same period of 2004-2005.