January 17, 2013

 

Russia's wheat prices rise as cold weather destroys crops

 

 

Russian wheat prices have increased this week as cold weather in some southern and western regions has damaged up to a quarter of the country's crop, according to SovEcon.

 

General Director at the Institute for Agricultural Market Studies (IKAR), Dmitry Rylko, said, "The most affected area looks like parts of Samara, south-west parts of Tatarstan, south-east of Voronezh, south and west of Volograd and north and north-east of Rostov."

 

Russia is historically one of the largest wheat exporters but was hit by drought in spring 2012, severely depleting grain stocks and sending global wheat prices to record highs. Industry experts are concerned that Russia's "breadbasket" region in the south of the country will be affected by the deteriorating weather conditions, thus raising fears of a spring deficit.

 

According to analytical agency SovEcon, in the last week of 2012, fifth-grade feed wheat rose from RUB300 (US$10) to RUB10,850 (US$356) per tonne. Last week, average domestic EXW (ex-silo) prices for third-grade and fourth-grade milling wheat rose RUB350 (US$11.50) to reach RUB11,250 (US$360) per tonne each.

 

Rob Bailey, a senior researcher for a London-based independent think-tank, warned that damage from frost and cold weather could cause a further hike in Russian wheat prices, though hopefully not enough to tempt the government into shrinking the world's exportable surplus.

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