August 26, 2013

Russia's wheat export prices have risen last week due to strong demand from customers concerned about unfavourable weather conditions, said  analysts from SovEcon Agriculture.


Rain is hindering Russia's grain harvest, thus increasing risks for crops and prompting the Institute for Agricultural Market Studies (IKAR) to downgrade its 2013 forecast for a second time in a week.


IKAR lowered its 2013 forecast to 89.2 million tonnes from 89.7 million as the barley crop was smaller than previously expected. The wheat harvest forecast remained unchanged at 51.9 million tonnes.


On August 14, the country's agriculture ministry pegged the grain crop at 90 million tonnes, down from a previous estimate of 95 million, due to dry weather in the Volga region.


Russia hopes the wheat crop will be at least 50 million tonnes, up one third from last year's drought affected harvest. 
However, some analysts have released a figure of 49 million tonnes to 50 million tonnes due to weather challenges.
The USDA's estimate of the Russian wheat crop is 54 million tonnes.


As of early this week, Russia had harvested about 36 million tonnes of wheat from about half of its planted area.
Exports, since the start of August, were 50% higher than the same period in July, at 1.4 million tonnes including 1.2 million tonnes of wheat, official data showed.

"Active export demand supports rising prices," SovEcon analysts said. 


At the end of last week, prices for wheat with 11.5% protein content had risen to about US$2, at US$250-US$255/tonne in deep water ports, based on a freight-on-board basis.


Higher Russian wheat prices were also following the European and US (Chicago) markets as a recent lack of rainfall in the US Midwest is stressing corn and soy crops.