Russia's grain traders await better prices

Russian grain prices were up in regions close to ports but traders are waiting for a decline of export prices amid hopes for a better harvest.

"Traders report unusually low volumes of pre-fixed new crop export contracts and explain it by very low buyers' activity, who are waiting for a further potential decline of export prices, as harvest prospects may improve," the Institute for Agricultural Market Studies (IKAR) said in a weekly note.

"Some major traders have stopped purchases," SovEcon agricultural analysts said in a separate weekly note. "But some kept buying grain actively in North Caucasus and in the Central Black Soil region."

IKAR estimated start up prices for new crop wheat with 11.5% protein content and bug damage of up to 2% at about US$163-US$165 per tonne, FOB Novorossiisk and at US$145-US$147 per tonne at shallow water ports.

SovEcon said that Egypt has bought around 300,000 tonnes of Russian wheat at recent tenders.

"With current domestic prices exporters will have some difficulty in executing these contracts without a loss," SovEcon said. "The necessity to honour the contracts rapidly, may push prices up."

"Close to record sunseed, rapeseed, soy and flaxseed areas in combination with quite favourable weather may lead to a record high harvest of each of the above mentioned crops," IKAR said.

As of the beginning of June, IKAR forecasts 2010 rapeseed crop at 890,000 tonnes, up from 667,000 and soy at 1.050 million tonnes, up from 944,000 tonnes.