November 13, 2008
Russian Minister of Agriculture Aleksey Gordeev on October 29 issued Order #479 to increase guaranteed procurement prices for class 3 milling wheat, according to a U.S. Department of Agriculture attache report posted Wednesday (November 12, 2008) on the Foreign Agricultural Services Web site.
The order increased guaranteed procurement prices for class 3 milling wheat from 5,000 rubles per metric tonne in the Ural, Siberian, and Far Eastern Federal Districts, and from 5,100 rubles per metric tonne in the Central, North-Western, Volga Valley, and the Southern Federal Districts, to 5,500 rubles per metric tonne in all federal districts.
The National Commodity Exchange (NAMEX) began purchasing class 3 wheat at this price on November. 6, 2008. The present market price of class 3 wheat in European Russia is 5,300-5,440 rubles per metric tonne, and in Siberia-5,800 rubles per metric tonne.
On Oct. 30, 2008, in accordance with the ministry's of agriculture's order #479, the OAO Agency for the Regulation of Food Markets, an agent for the grain procurement interventions, issued a letter confirming the new price for Class 3 milling wheat for the state procurement tenders. Tenders were held on November 6, and November 7, 2008. Interventions began on August 19, 2008, and the last tender was on October 29, 2008. From August 19 through October 29, 2008, 22 tenders were held, and 616,785 metric tonnes of grain were purchased, including 4,860 metric tonnes of soft milling wheat, Class 3, 181,305 metric tonnes of soft milling wheat, Class 4, and 303,615 metric tonnes of soft wheat, Class 5. The government also purchased 10,395 metric tonnes of milling rye, Group A, and 116,610 metric tonnes of fodder barley. Milling wheat, Class 3, was purchased at these tenders only twice: 2,700 metric tonnes were purchased on October 14, and 2,160 metric tonnes - on October 29, 2008.
The market prices for the top quality milling wheat were decreasing in October, but remained more attractive than the procurement prices, and therefore farmers refrained from selling class 3 wheat to the government. The coming November tenders will show, whether, and to what extent increased procurement prices of milling wheat, Class 3, changed the situation.