March 13, 2013

 

Russia's wheat prices continue to drop

 

 

Although Ukraine may decide to make wheat available from April, imports of Ukrainian wheat are being ruled out by Russia because the latter's local wheat prices are declining.

 

Russia's SovEcon agriculture analysts said on Monday (Mar 4), the Russian wheat market has been stretched by last year's drought stricken harvest, but prices have been falling since early February as a result of sales from state intervention stocks.

 

Russia currently imports wheat from Kazakhstan which does not have to pay a 5% grain import duty. The Russian government plans to remove the tariff in April or May and until early July or August when new crop is likely to arrive.

 

The proposal would decrease the price for wheat from Ukraine, another major wheat exporter in the Black Sea region, by about RUB500 (US$16), SovEcon said in a note.

 

Ukraine will decide next month whether to lift restrictions on wheat exports that were imposed after a poor harvest last year, Agriculture Minister Mykola Prysyazhnyuk said last week.

 

"The price for Ukrainian milling wheat is estimated at slightly more than RUB11,000 (US$360) per tonne now including delivery to the Russian border and duty payments," SovEcon added. "This is not very interesting for consumers in Russia's Central Black Earth region."

 

Ukraine has capped exports at 6.3 million tonnes in the current season, which runs to June 2013. So far in the current season wheat exports have reached 6.179 million tonnes.

 

The average domestic EXW (ex-silo) price in the European part of Russia for milling wheat declined by RUB200 (US$6.51) to RUB10,875 (US$350) per tonne last week, SovEcon said.

 

Price for Ukrainian third class milling wheat was seen at US$263 per tonne excluding works last week. Russia's feed wheat lost RUB200 (US$6.51) to reach RUB10,575 (US$344) per tonne last week, while barley fell RUB175 (US$6) to RUB8,850 (US$288) per tonne. Corn prices were down RUB150 (US$5) at RUB8,925 (US$291) per tonne, while rye prices were seen at RUB8,050 (US$262) per tonne, down RUB200 (US$6.51).

 

Russia's exportable surplus of wheat was exhausted several months ago, while some corn export continues. Corn export prices fell to RUB8,300-8,700 (US$270-283) per tonne last week from RUB8,400-8,800 (US$273-286) per tonne on a carriage-paid to (CPT) basis, SovEcon added.

 

Domestic prices for sunflower seeds fell RUB100 (US$3.26) to RUB16,275 (US$530) per tonne, it said. Export prices for crude sunflower oil were down US$10 at US$1,140 a tonne on a free-on-board basis.