February 17, 2009

Most Russian grain prices fell last week as export demand weakens on the strengthening rouble and a decline in world prices which reversed several weeks of growth, analysts said Monday (Feb 16).

 

Ordinary wheat export forward prices fell to US$190-193 per tonne and feed barley to US$135-140, the Institute for Agricultural Market Studies (IKAR) said.

 

IKAR said domestic wheat prices had lost its value both in dollar and rouble terms. In southern Russia, third-grade wheat ended the week at US$173 per tonne, fourth-grade at US$152 and fifth-grade at US$121.

 

Feed barley price in the south fell to US$100 per tonne, although corn rose to US$117, IKAR said.

 

Russia's results of a number of soft wheat tenders were mixed, reflecting some loss of price competitiveness in the past few weeks, IKAR said.

 

Russia also sold 150,000 tonnes of wheat to Egypt at US$185-187 per tonne FOB last week, compared with US$192 per tonne a week before, SovEcon agricultural analysts said.

 

SovEcon analysts said it is possible that in the near future, competition in global wheat markets will increase due to lower freight rates and the stronger position of US wheat in traditional Russian export markets.

 

SovEcon expects a downward trend in the domestic market, and local milling wheat prices should lose several hundred roubles per tonne or more to remain competitive, as world wheat prices may decline further on high stocks.

 

Intervention purchases continue to fall, and the government bought just 100,000 tonnes of grain last week.

 

But if prices continue to weaken, producers' interest in feed grain interventions may be reignited, according to IKAR.

 

As of January 1, medium and large farms held grain stocks that were 65-percent larger than a year ago. Wheat stocks and corn stocks were 76-percent and 190-percent larger, respectively.

 

Demand from grain processors had also decreased.