August 12, 2008

Prices for Russian feed grain fall on record harvest and poorer quality

Russian feed grain prices continued their decline as expectations of a record-high harvest are coupled with reports of poor wheat quality in some regions, sector analysts said.

Meanwhile, milling wheat prices have been stable.

Exporters, betting that new-crop wheat prices are nearing lows, have stepped up purchases. State intervention purchases will be crucial in deciding prices, analyst group SovEcon said.

The government has said it plans to buy 2-3 million tonnes of grain in the current 2008/09 crop year to support domestic prices and to sell grain later in the season.

SovEcon said that only milling wheat and rye are included on the government purchasing list, but feed grains may be included later.

SovEcon said all prices had fallen in the last week, although the drop in third- and fourth-grade milling wheat was much lower than the 200 rouble decline in feed wheat and 550 roubles on feed barley.

The Institute for Agricultural Market Studies (IKAR) said the combination of a record-high harvest and low wheat quality were behind the simultaneous increase in milling wheat and decline in feed wheat prices.

Meanwhile, sunflower oil prices are expected to lose about 25 percent of their value before the new sunseed harvest to 31,000-34,000 from 38,000-39,000 roubles currently, according to IKAR.