March 6, 2012

 

 

Due to modest demand ahead of possible grain supply from Kazakhstan and from Russian state grain stocks during government interventions, Russian grain prices were stable last week, analysts said.

 

Russian wheat with 12.5% protein content slightly strengthened to US$283 per tonne from US$280 per tonne on a free-on-board basis (FOB) in the port of Novorossiisk, The Institute for Agricultural Market Studies (IKAR) said.

 

"However, it mostly happened because of combination of rouble strengthening and inability of exporters to originate at lower prices... General demand on the Russian wheat at such prices is quite modest," it added.

 

SovEcon analysts wrote in a weekly market roundup that fourth-grade wheat purchasing prices in Russian deep-water ports declined to RUB8,200-8,400 (US$280-290) per tonne last week from RUB8,400 (US$290) per tonne on a carriage paid to (CPT) basis.

Average domestic prices for the third-grade milling wheat stayed at RUB6,725 (US$230) per tonne ex-works in European Russia. Fourth-grade prices were also flat at RUB6,700 (US$230) per tonne ex-works, SovEcon said.

 

US CBOT May wheat slipped 0.26% to US$6.72 per bushel, still pressured by abundant wheat stocks globally. The most active May contract in Western Europe was up EUR1.0 (US$1.32) or 0.48% at EUR211.50 (US$279.2) a tonne.

 

Russia, by contrast, has little left in the way of market stocks and has all but dropped out of the running to supply its biggest wheat buyer, Egypt, which has turned to US wheat to cover its needs from April onward.

 

Suppliers of grain from Russian ports were focusing on incoming supplies from Kazakhstan and on possible sales from the Russian government grain stocks in the course of market interventions.

 

SovEcon has said intervention sales could start no earlier than late March, when the level of intervention prices and tender procedure were likely to become official.

 

Bad weather has also hampered Russian exports. Unusually harsh conditions have caused the sporadic closure of Russia's main deep-water export port, but Russian loadings are expected to rise again with the arrival of Kazakh wheat in Novorossiisk and the imminent thaw of shallow-water ports on the Azov Sea.

 

"Azov will return to ordinary work in the first or in the second 10 days of March," a trader said.

 

IKAR said that sales of grain from shallow water ports have resumed and April requirements were covered.

 

On sunseeds, the purchase price index was unchanged in rouble terms and stayed at 10,980 per tonne, while it rose slightly in dollars and reached US$375 per tonne from US$371, IKAR said.

 

Crushers' needs were well covered and farms retained stocks, IKAR added. "There might be a price correction down in the nearest weeks," IKAR said.

 

SovEcon said the average sunseed prices added RUB200 (US$6.79) and reached RUB10,975 (US$380) per tonne.

 

Crude sunoil prices strengthened to RUB30,600 (US$1,039) per tonne from RUB30,540 (US$1,037), while in dollar it reached US$1,045 per tonne, up US$19, IKAR added. SovEcon pegged crude sunoil prices at RUB31,850 (US$1,100) per tonne, up RUB425 (US$14.43).

 

The soy price index in southern Russia was also unchanged in roubles but strengthened in dollars to US$512 from US$504 per tonne, IKAR said.

 

Domestic white sugar prices strengthened to US$857 per tonne from US$833, while in roubles it added RUB300 (US$10.18) and reached 25,100 per tonne due to lowering beet sugar supply and concentration of volumes in hands of smaller number of traders, IKAR believes.