April 10, 2012

 

Russia's wheat prices down on state sales, competition

Sales from Russian state interventions last week and competition from neighbouring Kazakhstan have further declined Russian wheat prices, analysts said on Monday (Apr 9).

 

"Interventions, which started very swiftly, led to some cooling down of market prices in the European part of Russia," the Institute for Agricultural Market Studies (IKAR) said in a note.

 

"Some further penetration of Kazakh wheat is observed at both Black and Azov Seas terminals," it added.

 

The Russian government sold 232,261 tonnes of grain during its first two intervention tenders this year, data from an exchange showed last week.

 

On a carriage-paid-to (CPT) basis, prices on Novorossiisk have declined to RUB7,300-7,500 (US$247-253) per tonne from RUB7,500-7,700 (US$253-260), although exporters said the supply was very limited, IKAR added.

 

SovEcon analysts wrote in a weekly market roundup that purchase prices of wheat with 11.5% protein content in Russian deep-water ports fell to RUB7,400-7,600 (US$250-257) per tonne last week from RUB7,500-7,800 (US$253-263) per tonne on a carriage-paid-to (CPT) basis.

 

The pace of shipping in shallow-water ports was active, where prices were quoted at RUB7,000-7,100 (US$236-240) per tonne, it added.

 

However, Russian wheat with 12.5% protein content gained slightly, climbing to US$276 per tonne from US$274 on a free-on-board basis (FOB) in the port of Novorossiisk, although the demand and market remain highly sporadic, IKAR said in a note.

 

Russia may export between 0.5-1 million tonnes of grain from state inventories, and wheat will account for over half, according to a government source, traders and analysts. As of end March, Russia exported more than 22.6 million tonnes of all grains, including legumes, which included about 18 million tonnes of wheat, IKAR said.

 

Egypt, the world's largest wheat importer, has bought 115,000 tonnes of US soft red winter wheat for May 21-31 shipment on a free on board basis last week. Russian wheat was also offered in the tender during the second week in a row at US$279.45-285.00 per tonne, although it did not win, SovEcon added.

 

Front-month May milling wheat futures were down 0.96%, at EUR211.25 (US$277) a tonne on the Euronext exchange in Paris during the last trading session on April 5. US CBOT May wheat added 0.27% to US$6.40 per bushel on Monday.

 

Russian average domestic prices for third-grade milling wheat lost RUB50 (US$1.69) to reach RUB6,575 (US$222) per tonne ex-works in European Russia. Fourth-grade prices were at RUB6,525 (US$220) per tonne ex-works last week, down RUB25 (US$0.84), SovEcon said.

 

For sunseeds, the domestic price index rose to US$390 per tonne from US$384 per tonne, or to RUB11,490 (US$388) per tonne from RUB11,260 (US$380) per tonne, IKAR said. SovEcon pegged it at RUB11,450 (US$387) per tonne, up RUB100 (US$3.38). Crude sunoil prices slightly strengthened to US$1,120 per tonne from US$1,094, IKAR said. SovEcon recorded them at RUB33,500 (US$1,131) per tonne, up RUB400 (US$13.51).