August 21, 2008

The Russian government failed to buy any grain at its first two intervention tenders as only one seller has been accredited so far, an exchange said on Wednesday (August 20, 2008).

There were 20 accreditation requests from potential sellers, but only one company managed to complete the process since last week, Sergei Naumov, director of the National Mercantile Exchange (NAMEX), told Reuters.

The government, with US$1.3 billion for the purchases, offered to buy only milling grain in the tenders held on Tuesday and Wednesday. Naumov said the number of sellers would increase when the government offers tenders for feed grains.

The next tender is expected to be held on Tuesday next week.

Russia officially expects to harvest at least 85 million tonnes of grain, compared to 81.8 million last year. Analysts have said that the crop may be even bigger, but quality issues meant the share of feed grain within it may be larger than last year.

While prices of milling grain have been rising, those of feed grain have been declining.

The government has set top purchase prices for benchmark third-grade milling wheat originating from the European part of Russia at 5,100 roubles (US$208.7).

Lower class fourth-grade wheat has been priced at 4,900 roubles (US$204.5 ) per tonne for European Russia and at 4,800 roubles (US$196.4 )for the eastern part.

Top level prices for fifth-grade feed wheat were set at 4,100 roubles (US$167.8 ) per tonne for the European part of Russia.

Feed barley had been priced at 3,800 roubles (US$155.5 ) irrespective of the region of origin.