December 27, 2012


Russia's wheat prices to hit new highs in 2013


Finishing this year with more than 75% gain, Russian wheat prices are expected to hit new highs next year buoyed by tight supply and worsening prospects for the 2013 winter crops.


"Farmers are not in a hurry to sell their grain. The main factor is expectation of higher prices during the new year," SovEcon agricultural analysts said in a note on Monday (Dec 24).


"Deteriorating weather conditions for winter crops are also not helping as it may increase demand for seeds needed for crops re-sowing during the spring," it added. Russia, historically one of largest wheat exporter, was hit by unfavourable weather during 2011-12 winter and by drought in spring this year, severely depleting grain stocks, sending domestic wheat prices to record highs and raising fears of a spring deficit.


This winter's grain harvest may be hurt by cold weather with a lack of snow in some parts of Russia's "bread basket" regions, according to SovEcon. The percentage of plantings, deemed to be in a poor state, does not exceed 8-9% as of now, Russia's Deputy Prime Minister Arkady Dvorkovich said on Monday. Last week, average domestic EXW (ex-silo) prices in the European part of the country for third-grade and fourth-grade milling wheat rose RUB350 (US$11.5) to reach RUB11,250 (US$360) per tonne each, according to SovEcon.


Fifth-grade feed wheat rose RUB300 (US$10) to RUB10,850 (US$356) per tonne last week, it said. Almost a year ago third-grade wheat was seen at RUB6,400 (US$210) per tonne, while fourth-grade was pegged at RUB6,300 (US$207) per tonne. As for export prices, demand for relatively expensive Russian wheat remained weak last week, making potential export difficulties caused by tough weather conditions less important.


Russia resumed oil and grain exports from the Black Sea port of Novorossiisk, also known as Novorossiysk, on December 21 after three days of windy weather. As to Russian shallow-water ports, terminals on the Azov Sea are frozen and almost 30 loaded vessels were stuck at delta of Don River at the end of last week, while unloaded vessels were ordered to wait until easing of weather conditions, IKAR added.

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