June 12, 2013

Russia's new-crop wheat prices drop for second week

As rains improved prospects for the harvest and the country's exports, Russia's prices for new-crop wheat fell for the second week in a row.

Russia's 2013 grain harvest will rise 34% on-year, to 95 million tonnes, which will include 54.5 million tonnes of wheat, according to the Agriculture Ministry's forecast.

The ministry hopes that the increased harvest will allow the world's third-largest wheat exporter to replenish stocks after a drought last year and boost its exports.

"The market may be too optimistic regarding supplies of Russia's wheat during the new season," SovEcon said in a note. The independent research organisation sees the 2013 wheat crop at between 50 million and 52 million tonnes.

Low carryover stocks and the government restocking programme are likely to limit the exportable surplus during the 2013-14 season which starts on July 1, SovEcon added. The Agriculture Ministry may buy up to five million tonnes of grain from the domestic market during 2013-14 to keep the country's exportable grain surplus in line with its own forecast of 18-20 million tonnes, it said last week.

Prices for new-crop milling wheat fell to a band of US$250 to US$258/tonne on a free-on-board (FOB) basis in deep-water ports last week from US$265 to US$270/tonne a week earlier, SovEcon said in a note. Benchmark November milling wheat on the Paris futures market was down 0.5% at EUR202.75 (US$270) a tonne by 1049 GMT on Monday (Jun 10).

According to the Institute for Agricultural Market Studies (IKAR), prices for Russia's new-crop barley were quoted at US$253/tonne, down from US$255 to US$257/tonne. Demand for higher priced old-crop export grain was negligible, SovEcon said. It pegged corn prices flat at RUB8,200 to RUB8,400 (US$250 to US$260) per tonne on a carriage paid-to (CPT) basis in shallow-water and in deep-water ports.