February 25, 2009

Russia's government grain purchases more than doubled last week from the previous week as market prices fell sharply, analysts said Tuesday (Feb 24).

Purchases rose to 250,000 tonnes last week as weaker domestic prices revived producers' interest in government tenders, the Institute for Agricultural Market Studies (IKAR) said.

Prices increased 30-50 percent from November to mid-February but main drivers behind the rise including government purchases, high world prices, rouble devaluation and increased demand from domestic processors resulting from low stocks lost momentum in February, SovEcon agricultural analysts said.

SovEcon expects prices to fall further as it may be too high with large producers' grain stocks and falling world prices, and that supply may increase soon.

IKAR said ordinary wheat export forward price fell to US$180-185 per tonne FOB Novorossiisk, and SovEcon said some exporters offered US$160.8-166.3 per tonne of fourth-grade wheat CPT Novorossiisk.

In south Russia, third-grade wheat ended the week at US$168 per tonne, fourth-grade at US$146 and fifth-grade feed wheat at US$114, down US$5-7 per tonne, IKAR said.

Feed barley price last week remained nearly unchanged at US$103 per tonne, while corn fell to US$109 per tonne, IKAR said, adding that grain exports could exceed one million tonnes in February.