July 15, 2008

 

Russian grain and oilseed prices fall despite rain delaying harvest

Russian grain and sunseed prices fell last week, in spite of a harvesting delay in the south of the country partly due to rain, analysts said.

 

Supply of old crop grain in the European part petered out as deals with last year's grain were made only in the eastern part of the country, SovEcon agricultural analysts said.

 

Many flour mills had stopped for seasonal repairs and operating mills did not need significant grain ahead of the new crop, it said.

 

Torrential rains in the south of the country delayed harvesting and shipments of new crop grain to the market.

 

Yields of harvested grain were higher than a year ago, but it needed additional drying.

 

"Despite the quality deterioration, gross wheat harvest is expected to be very good," the Institute for Agricultural Market Studies (IKAR) said.

 

The Agriculture ministry has called on farmers not to sell third-grade wheat below 6,000-6,500 roubles per tonne, SovEcon said. The government's support price for third-grade wheat at 5,100 roubles (US$216) per tonne this year.

 

Some traders believe that the declarations may mean the government is planning to raise the support price, SovEcon said.

 

Export demand is the main factor which determines the new crop prices, it said.

 

Exporters bid for fourth-grade wheat at 5,500-5,800 roubles (US$237.60-US$250.56 ) per tonne CPT Novorossisk, SovEcon said.

 

FOB ordinary wheat price stayed at US$275-$280 per tonne, resulting in fourth-grade wheat starting prices in the range of 5,300-5,600 (US$229.00-US$241.90 ) roubles ex-silo, South Russia, IKAR said.

 

Hot and dry weather is expected in the centre and in the south of the country in the coming days and this will speed up the harvesting and increase pressure on prices, SovEcon said.

 

Winter barley harvestings were almost completed. Very strong harvests in Russia and Ukraine have caused export prices to fall to US$240-$250, FOB Novorossiisk, Ikar said.

 

Sunseed and sunoil prices were also declining. But Russian crude sun oil was still more expensive than Ukrainian and therefore a further decline appeared imminent, SovEcon said.

 

Winter rapeseed prices in southern Russia are kept in the range of 11,500-12,500 (US$496.79-US$540.00 ) roubles per tonne.