December 20, 2011

Russian grain stocks rise, prices hike

Local and export grain prices in Russia rose a little last week from the previous one as processors and exporters built up stocks ahead of the long coming holidays, a grain sector lobby group and analysts said Monday (Dec 19).

"The situation is rather unusual," said Arkady Zlochevsky, president of the Russian Grain Union industry body.

"Normally, December is a month when all activity on the domestic market falls drastically. Now exports are on the decline, but... a relative price stability prompted buyers -mixed feed producers and millers - to start buying grain in order to build up stocks."

Average Russian EXW (ex-silo) wheat prices rose by RUB50 (US$1.56) per tonne last week, SovEcon agricultural analysts said in a weekly note, adding that most other cereals prices also showed a slight increase.

SovEcon said that corn, which kept declining in the last few weeks, also rose by some RUB25 (US$0.78) per tonne as it became relatively cheap compared with other feed grains. Animal breeders as well as exporters started buying it.

Exporters raised prices for the benchmark fourth-grade wheat at ports to RUB7,100-7,400 (US$221.13-$230.47) per tonne from RUB7,100-7,300 (US$221.13-$227.35) a week before, SovEcon said.

"A decline of the rouble has contributed to the increase, but the main reason behind it was the exporters' necessity to increase stocks ahead of lengthy holidays in order to honour already signed contracts," it said.

Free on board (FOB) prices for ordinary wheat with 11.5% protein content rose to US$236 per tonne from US$235, while wheat with 12.5% protein content rose to US$243 per tonne from US$242 as stocks in southern Russia dwindled, the Institute for Agricultural Market Studies (IKAR) said in a separate note.

Corn FOB price declined to US$197 per tonne from US$200 at shallow water ports due to competition from Ukraine, it said.

Sunseed prices rose to US$340 from US$329 per tonne, as supply of new crop seeds slowed down while crude sunoil weakened to US$1,055 per tonne from US$1,071, IKAR said. Sunseed prices rose last week due to a rise in competition between crushers, SovEcon said.