June 2, 2004

Russian Grain Prices Down

Russian grain prices have been decreasing since their peak in February, but bread and grain product prices continue to rise, fueled by the high costs of fuel, electricity, and rental payments, according to a U.S. Department of Agriculture attache report posted on the Foreign Agricultural Service Web site.
 
Grain Prices
 
Grain prices have been decreasing since peaking in February. This price decrease accelerated in April based on a good crop forecast, decreasing international prices, a slight decrease in freight rates, the desire of grain owners to get rid of stocks on the eve of the new crop (harvesting will start in mid-June in the southern parts of Russia), and the desire of grain traders to push farmgate prices down.
 
Bread and Grain Products Prices
 
Despite falling grain prices, process for bread and grain products (except for groats) continued to rise in April and May, but at a slower pace, the report said. Data for these months is not available, but March data illustrates the slowing rate of increase.
 
The price of wheat flour increased by 4.7%, the price of rye and wheat bread increased by 1.6%, and the price for white bread increased by less than 1%.
 
A month ago (February 2004), prices climbed by 6.6%, 3.5%, and 3% respectively. Only rice and pasta prices grew faster. After the election, the political hullabaloo surrounding prices ceased and post-election price increases are the result of the high costs of fuel, electricity, rental payments, and other inputs supplies used by bakeries and mills. Sales interventions to flour mills also played a role in the slowdown in the bread price increase.

Source: USDA