April 29, 2014


Russia's wheat export prices may drop 7%


In July, when the new crop starts to arrive on the market in large volumes, Russia's wheat export prices are expected to fall by 7% from current levels, the Institute for Agricultural Market Studies (IKAR) said.


Russia, expected to be the world's fifth-largest wheat exporter this season, is shipping modest volumes now after massive supplies in previous months have cut into its stocks.


Between the start of the 2013-14 season on July 1 and April 20, the country shipped more than 16.5 million tonnes of wheat, IKAR said.


Russia will export an additional one million tonnes by the end of the season, it added. Future prices for the new wheat crop with 12.5% protein content are quoted by market participants at US$270 per tonne on a free-on-board (FOB) basis in the Black Sea now, IKAR said.


That is its first estimate for the price of the new crop. Southern Federal District, the country's main wheat-exporting region, usually starts the harvesting campaign in June.


For the old crop, the tension between Russia and Ukraine, which are adding to concerns over supplies from the Black Sea, continued to lend support to prices last week.


Prices for old crop wheat with 12.5% protein content rose US$2 to US$291 per tonne last week on the FOB basis in the Black Sea, IKAR said.


Russia's spring grains sowing campaign has continued to proceed faster than last year thanks to the dry weather, and farmers expect to sow a larger area for sunflower and corn this year, agriculture analytical firm SovEcon said.


As of April 25, farmers had sown 5.3 million hectares, or 16.5% of the whole planned area for spring grains, which was 1.2 million hectares more than on the same day a year ago, according to data from the Agriculture Ministry.


Spring wheat was sown on 498,400 hectares (3.8% of the whole planned area), barley - 2.9 million hectares (33.6%), corn - 801,000 hectares (30.9%) and sunflower - 1.2 million hectares (17.4%).


Market participants expect the first new crop grain - winter barley - to arrive on the market in mid-June, earlier than usual and thanks to an early spring, SovEcon said.


It estimated that Russian sunflower seed prices declined by RUB100 (US$2.80) to RUB13,125 (US$360) a tonne at the end of last week.


IKAR pegged its sunseed price index at US$379 per tonne, up US$4.


Export prices for sunflower oil were flat, at US$870-880 a tonne on the FOB basis in the Black Sea, according to SovEcon.

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