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IKAR in Mass Media

Russia grain export prices under pressure-analysts

18 сентября 2008 года

MOSCOW, Sept 8 (Reuters) - Russian milling wheat prices have come under pressure as international grain prices have sunk, the dollar has strengthened and as crop quality in eastern Russia appears to have been better than originally expected.

Russian wheat is no longer competitive on world markets, as international prices have come down, and Russian companies lost out to U.S., Canadian and Ukrainian suppliers in an Egyptian tender last week, agricultural analyst group SovEcon said.

SovEcon said prices had risen slightly last week, though were starting to come under pressure, while the Institute of Agricultural Market Studies (IKAR) said the decline had already begun, with wheat export prices falling to $270 a tonne from $285, free-on-board Novorossiisk.

"The weakening of the rouble helps the Russian market, but this is not sufficient to raise the competitiveness of Russian grain in the world," SovEcon said.

The rouble fell last week to its lowest in 18 months as investors, spooked by war in Georgia and a souring of relations with the West, took money out of Russia and stock markets fell.

Russia is now harvesting its 2008 crop, which is likely to be its largest in 15 years. Official estimates place it at no less than 95 million tonnes of grain.

As of Sept. 5, Russia is estimated to have exported a record amount of grain since the start of the season -- almost 3.5 million tonnes, 90 percent of which was wheat, IKAR said,

IKAR said domestic milling wheat markets had cooled, with third- and fourth-grade each losing $5 in the last week to trade at $242 and $211 a tonne respectively. Feed wheat lost $1 to trade at $164, and the spread to milling wheat is at a record.

SovEcon, however, said feed wheat prices rose by an almost negligible 25 roubles ($0.992) last week. Support was provided by the start of government intervention tenders, but SovEcon said the effect of the tenders was "psychological", as only 38,340 tonnes of feed wheat had been purchased to date.

NO EGYPTIAN WIN

SovEcon, unlike IKAR, also said third-grade milling wheat prices rose last week, by 150 roubles, while fourth-grade added just 25 roubles on average.

But the group said a downward price trend on world commodity markets would soon filter through to the Russian market.

Russia did not win a tender in Egypt last week, it said, as Egyptian state buying agency GASC bought 240,000 tonnes of Canadian and U.S. wheat at $230-$237 per tonne FOB and 52,500 tonnes of Ukrainian wheat at $259 per tonne FOB.

European wheat prices had already lost around $30 per tonne and U.S. soft red wheat $50 per tonne, SovEcon said.

"Until recently, Russian and Ukrainian wheat prices were quite competitive on many important export markets, but currently this advantage has already been lost," it said.

"The market will soon re-assess the share of feed grain in the new crop, which may be not so low as was previously believed."

IKAR said sunseed harvesting in southern Russia had reached a decisive stage. Due to the strengthening of the dollar, prices in dollar equivalent had strengthened to $340-350 per tonne, while rouble prices remained unchanged, it said.

Yields in the south of Russia are higher than a year ago, but this is expected to change as the harvest moves north to more draught-exposed areas.

Crude sunseed oil prices have decreased sharply: to $1,100 per tonne in the south of Russia and to $1,200-1,250 per tonne in those areas which have yet to be harvested.

Domestic sugar prices decreased as sugar beet processing continues. The price in Krasnodar shrunk to $570 a tonne.

Source: Reuters  |  #grain   |  Comments: 0   Views: 71

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