February 23, 2011

Russia may sell feed grain at purchase price

Russia could sell feed grain from intervention stocks at the purchase price, or about half the market rate, while temporarily suspending milling grain intervention sales, First Deputy Prime Minister Viktor Zubkov said.

Feed grain prices have soared following last summer's devastating drought, causing farmers in some Russian regions to slaughter much of their livestock.

Russia, which had been the world's third-largest wheat exporter, banned grain exports last year in order to retain output for the domestic market after the drought cut its grain crop by more than a third to 60.9 million tonnes.

Russia began intervention tenders of milling and feed grain this month in help suppress rising prices, but it may suspend milling grain sales as it monitors market developments.

Inflation has surged to 2.9% so far this year, compared to 2.1% in the same period a year earlier.

"Milling grain can continue to be sold at auction, but perhaps it can be suspended for an indefinite period, in order to take another look at market prices," Zubkov told President Dmitry Medvedev.

Medvedev earlier this month said grain tenders might be suspended, citing corruption concerns.

The government plans to sell 2.5 million tonnes of grain at intervention tenders in the first half of this year.

At recent intervention tenders, the price range for feed barley has exceeded the range for milling wheat.