February 25, 2011

 

Russian feed grain prices remain high despite cooling efforts

 

 

Russia's feed grain prices have been holding strong despite efforts to cool prices through state intervention tenders that have poured around 200,000 tonnes of feed wheat and barley onto the market, analysts said.

 

Soaring prices for feed grain have caused farmers in some Russian regions to slaughter much of their herds, casting doubt on Russia's ambitions to move toward self sufficiency in meat.

 

A USDA attaché report said earlier this month that Russia would have a feed grain shortage of 2.5-3 million tonnes by April-May which could stimulate imports this year.

 

To cool prices, Russia could sell feed grain from intervention stocks at the purchase price, or about half the market rate, while pausing intervention sales of milling grain, Deputy Prime Minister Viktor Zubkov said on Tuesday (Feb 22).

 

The SovEcon think tank estimated that out of 384,000 of grain sold through intervention tenders, 200,000 tonnes were feed wheat and barley.

 

But the tenders have barely dented prices for feed barley, which it saw offered at an average price of RUB8,800 (US$301.94) per tonne ex-works in European Russia last week, it said.

 

"The decline compared to the previous week was only RUB25 (US$0.86). As a reminder, until last week prices have risen steadily, with small pauses, from the middle of last year," SovEcon said.

 

The Institute for Agricultural Market Studies (IKAR) pegged feed barley in the south of Russia at US$303 in a thin market.

 

IKAR said it saw offers of imported Ukrainian corn on the market in Russia's south but the supply failed to cool prices, which rose to US$310 per tonne from US$305 per tonne.

 

SovEcon saw corn prices strengthening by RUB200 (US$6.86) across European Russia to RUB8,950 (US$307.09) per tonne and saw no imported volumes offered.

 

In wheat, the intervention tenders had a more pronounced effect, the analysts said. SovEcon said prices fell by around RUB50 (US$1.72) for all grades, with third grade milling wheat offered at an average of RUB7,225 (US$247.90) per tonne.

 

Fifth grade feed wheat was offered at an average of 6,575 per tonne in European Russia, it said.

 

In the south, where wheat had seen support from millers, who can still export flour despite a ban on other grain exports, prices slipped to US$236 per tonne from US$238 and feed wheat declined to US$211 from US$213 per tonne, IKAR said.