April 14, 2011

Russia sells 828,139 tonnes grain via interventions

In a bid to contain price rises after a severe drought, the Russian government has sold 828,139 tonnes of grain in intervention tenders launched this year.

The Russian government managed to sell 12,950 tonnes of grain at the latest trade session, up from 6,480 tonnes at the previous one.

Analysts expect buyers' interest in the tenders to fall as rising grain supplies ahead of spring sowing pushes market prices down.

The government started holding the grain tenders on February 4 in response to last summer's drought that cut the harvest by more than a third to 60.9 million tonnes, leading to a rise in grain prices.

Russia, formerly the world's third-largest wheat exporter, banned grain exports from August 15, 2010 to July 1, 2011 and announced the sale of 2.5 million tonnes of grain at intervention tenders in the first half of this year.

The government has said it will distribute an additional 3.3 million tonnes of grain to drought-hit regions at a low fixed price from February. Before the start of the tenders, the government had 9.6 million tonnes of grain in its stocks. The government sells grain only to flour millers, animal breeders and animal feed producers.

The starting price for benchmark third-grade milling wheat and lower quality fourth-grade milling wheat purchased in 2005-2006 was set at RUB6,000 (US$212.5) per tonne. The starting price for third-grade wheat purchased in 2008-2009 was set at RUB6,600 (US$233.8) per tonne for the Urals and Siberian Federal Districts, at RUB6,050 (US$214.3) per tonne for most of the Central, Southern and Volga Federal Districts. For these regions the starting price for fourth-grade wheat purchased in 2008-2009 was set at RUB6,000 (US$212.5) per tonne. For Moscow and several regions of the Central Federal Districts, as well as the Perm region in Northern Urals and for the exclave of Kaliningrad, the price for third-grade wheat was set at RUB7,535 (US$266.9) per tonne. The starting price for fourth-grade wheat for the Central and North-Western Federal Districts was set at RUB6,875 (US$243.5) per tonne. Fifth-grade feed wheat, milling rye and feed barley are offered at the starting price of RUB6,000 (US$212.5) per tonne regardless of the region. All prices include a 10% value added tax.