October 11, 2011

 

Russian wheat prices continue to decrease

 

 

Although wheat prices in Siberia and Urals increased slightly after a reduction in railway fees, average Russia's wheat prices followed the international trend and continued to fall last week, according to analysts and producers.

 

CBOT grain futures have been taking price direction in the last two weeks largely from macroeconomic factors centered on Europe's debt crisis and the gyrating dollar, even as the world's biggest corn and soy harvest progressed, with prices dropping to multimonths lows.

 

CBOT wheat futures <Wc1> fell for the fifth straight week last week.

 

Average EXW third-grade wheat offer prices declined in the European part of Russia by RUB75 (US$2.38) to RUB6,050 (US$191.96) per tonne, fourth-grade by RUB100 (US$3.17) to RUB5,900 (US$187.20) and feed wheat by RUB25 (US$0.79) to RUB5,125 (US$162.61), SovEcon agricultural analysts said in their weekly report.

 

"The decline, which started in the North Caucasus, started to spread to other regions, including central Russia, where wheat prices declined by RUB100-150 (US$3.17-4.76) per tonne last week," SovEcon said.

 

Average prices of other cereals were practically unchanged in European Russia last week.

 

But prices in Siberia and in the Urals rose on expectations of a government decision to cut a railway fee for long distance grain shipments for regions located far from export ports, the National Union of Grain Producers said in a separate report.

 

The Russian Federal Tariff Service decided last week to halve the fee for transporting grain from Siberia and the Urals Kurgan region for distances over 1,100 kilometres (683.5 miles).

 

The National Union, the industry lobby, said third-grade wheat rose by RUB150 (US$4.76) in the Urals last week to RUB4,450 (US$141.19) per tonne and fourth-grade by RUB50 (US$1.58) per tonne to RUB4,000 (US$126.92).

 

In Siberia, third-grade wheat rose by RUB150 (US$4.76) to RUB4,600 (US$145.95) per tonne, fourth grade wheat by RUB100 (US$3.17) per tonne to RUB4,150 (US$131.68), the lobby said.

 

SovEcon said that most traders kept offering to buy fourth-grade wheat in Novorossiisk at RUB7,300-7,400 (US$231.62-234.79) per tonne, but some companies stopped buying grain.

 

SovEcon expects Russian wheat prices to keep declining after Ukraine's president signs into law a removal of grain export tariffs, which will increase competition and push down Russian export prices.

 

Another factor which will put pressure on Russian prices is unexpectedly high stocks of corn in the US, SovEcon said.

 

A USDA report surprised traders last week as corn stocks came 17% above average trade estimate.