November 6, 2006

Russian grain profits from continued misfortune

Grain processors have been facing further price hikes as the value of Russian barley continues to increase, pushed by supply issues in Ukraine and Australia.

Following adverse weather conditions this summer, food producers were faced with dwindling supplies of grain, which helped drive a price hike over a period normally associated with decreased value.

A fresh supply of crops during harvest period, helped temper demand by processors and food producers for grain supplies.

However, with the Russian Ministry for Agriculture's estimates for 2006 grain production at 73-74 million tonnes, down from 78 million tonnes last year, prices have already begun a hike, which is yet to abate.

Barley rose by EUR  6 per tonne to reach EUR 95 per tonne. Milling wheat too registered an increase.

The prices have been affected by lower forecasts of Australian crops, and quotas being imposed on Ukrainian grain, with the country determined not to exceed exports of 600,000 tons for 2006.

Price increase was beginning to slow its pace though supply problems continued to drive indefinite growth in grain prices throughout the sector.