June 2, 2011

 

Russian wheat prices jump after lifting of export ban

 

 

The Russian Grain Union lobby group said that prices of fourth-grade milling wheat, the type used in exports, had soared by some RUB700 (US$25) to nearly RUB6,000 (US$215) a tonne since Vladimir Putin, the Russian prime minister, on Saturday (May 28) unveiled the lifting of export curbs from July 1.

 

The rise could even be higher, at least, in terms of what farmers are asking for, Andrey Sizov, managing director of Moscow-based analysis group SovEcon, said, estimating the increase at RUB500-RUB1,000 (US$17.88-US$35.75) per tonne.

 

"But that is an offer price. It is correct to say the offer price is going up, but that does not mean there is any trade going on at these levels," Sizov said.

 

The Russian wheat market is being keenly watched abroad now that the country, a fierce price competitor, is returning to exports.
 

Iowa-based broker, US Commodities, said, "Russia currently has the cheapest wheat in the world. Russia's re-entry into the world grain markets will shift demand from the US in the coming months."

 

In fact, Russia's wheat market was likely to take a couple of weeks to adjust to the return to exports, as it did when the ban was announced last August, Sizov said.

 

And prices then were likely to reflect merchants' bargaining power, after stocking up on grains since late April in expectation of a resumption in trade.

 

CBOT wheat for July stood 1.1% lower at US$7.74 a bushel, with Paris wheat for November down 1.4% at EUR234.50 (US$8.38) a tonne.

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