June 28, 2011

Russian grain prices fall on lack of export demand

Russian grain prices declined last week as grain traders suspended purchases or lowered bid prices after major buyer Egypt omitted Russian wheat at its latest tender, analysts said on Monday (Jun 27).

Egypt's main state wheat buyer said last week it had postponed any purchase of Russian wheat until the Russian harvest was gathered in July and wanted to ensure future purchases met Egyptian conditions.

The price for ordinary milling wheat with 11.5% protein content declined to US$240-US$245 per tonne (FOB Black Sea), down from US$280-US$285, and to US$115-US$120 per tonne (FOB shallow water Azov Sea ports), down from US$230, and then to US$115-US$120 per tonne, the Institute for Agricultural Market Studies (IKAR) said.

Feed barley shallow water prices declined to US$210-US$215 per tonne, it said in a weekly note.

In Novorossiisk, CPT wheat prices declined to RUB6,000 (US$212) per tonne from RUB6,800 (US$241) as most exporters stopped buying grain as silos close to export ports were full, IKAR said, adding it expected a further price decline.

"If two weeks before in Novorossiisk buyers were ready to buy fourth-grade milling wheat at RUB7,000 (US$248) per tonne (CPT), last week bids were fewer and the price was named in the region of RUB6,000 (US$212)," SovEcon agricultural analysts said in a separate note.

It said third-grade milling wheat lost RUB50 (US$1.768) last week, declining to RUB6,475 (US$229) per tonne EXW European Russia.

Fourth-grade wheat fell RUB100 (US$3.536) to RUB6,325 (US$224) per tonne and fifth-grade feed wheat by RUB50 (US$1.768) to RUB5,675 (US$201) .

SovEcon said that it believes Egypt will revise its policy and will restart buying Russian grain, while a decline in the international prices lowers the possibility of Russian export restrictions by the government.

"Therefore we do not expect big rises or declines on the Russian wheat market," SovEcon said.