September 8, 2009

Most Russian grain prices declined last week as new crop grain continued to arrive on the market, and prices may continue falling due to a delay in government grain purchases, analysts said Monday (Sept 7).

Forward contracts for ordinary milling wheat with protein content of 11.5 percent were fixed at US$160-US$162 per tonne FOB Novorossiisk compared to US$162.5 the week before, the Institute for Agricultural Market Studies (IKAR) said.

Feed barley rose to US$130 per tonne from US$125, it said.

Exporters' CPT prices for fourth-grade wheat in Novorossisk were stable at 4,500-4,600 roubles per tonne and declined from the same level to RUB4,100-RUB4,300 per tonne at shallow water ports, SovEcon agricultural analysts said.

Domestic grain prices declined rather modestly - third-grade wheat to US$130 per tonne from US$131, fourth-grade to US$115 per tonne from US$119 and feed wheat to US$95 per tonne from US$96, all ex-silo basis, IKAR said.

Feed barley price declined to US$86 per tonne from US$88, while corn start-up prices were in the region of US$150 per tonne, it said.

The difference between offer and bid prices in many regions was wide last week, SovEcon said. Producers were reluctant to lower prices awaiting an announcement of the start of government intervention purchases.

But the government supported a proposal by the Agriculture Ministry to postpone the start of intervention tenders to October from the earlier planned timeframe of the end of August to the beginning of September, SovEcon said.

SovEcon believes that the delay in the purchases may push grain prices further down, especially in the centre of Russia and in Siberia, which expect high crops this year.

This may also slow down the winter grain sowing in the south, where farmers expected to use the proceeds from grains sale to the government to finance the sowing campaign, it said.

US$1 = RUB31.4840 (Sept 8)