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Ban cuts Russia grain prices in exporting regions

10 сентября 2010 года

MOSCOW, Aug 16 (Reuters) - Russian grain prices declined last week in export oriented regions ahead of an export ban, which became effective on Sunday, but prices continued rising in the Urals and in Siberia, analysts said on Monday.

"The price spectrum is still too wide, as the market players need more time to fully adjust to the realities after the 'grain export dust' settles down," the Institute for Agricultural Market Studies (IKAR) said in a weekly note.

A severe drought, which hit many Russian grain-growing regions triggered a government ban on exports of grain and grain products from Aug. 15 to Dec. 31. SovEcon agricultural analysts said in their note that fourth-grade (ordinary) milling wheat, Russia's main export item, lead the race losing 150 roubles ($4.91) and declining to 6,025 roubles per tonne (EXW) in the European part of Russia.

Feed wheat lost 125 roubles and fell to 5,300 per tonne, while other cereals lost less.

In the Urals and in Siberia prices kept rising. In western Siberia third-grade milling wheat added 600 roubles, rising to 5,350 per tonne EXW, SovEcon said.

"We believe that in the European Russia average prices will keep falling in the nearest future because of the export ban," it said.

"The government will try using its intervention stocks as a means of pressure on the domestic prices, but it is not clear how much it will actually sell."

SovEcon said that it still expects prices to continue going up after a period of relative stability or price decline because of expected low stocks at the end of the current crop year.

Grain imports to Russia also may become possible in the not so distant future. IKAR estimated Russia's grain exports at 2.6 million tonnes, including 2.4 million tonnes of wheat between the start of the current crop year on July 1 and Aug. 10.

This is in line with an Agriculture ministry estimate. It said that Russia may export 2.8 million tonnes of grain, including 1.6 million tonnes in July and the remainder until Aug. 15.


Because of the drought IKAR has cut its forecast for sunseed output to 6.5-6.7 million tonnes from a previous 6.9 million tonnes and soybean output to 1.15 million tonnes from 1.25 million, which will still be a record soybean outcome for Russia.

Russia produced 6.45 million tonnes of sunseeds and 944,000 tonnes of soybeans in 2009.

But it has raised its forecast of rapeseed production to 770,000 tonnes from a previous 750,000 tonnes because the rapeseed planting area proved to be larger than previously expected. Russia produced 667,000 tonnes of rapeseed last year.

Last week, a senior weather forecaster told Reuters that the drought was also damaging sunseeds and sugar beets.

IKAR has also lowered its forecast for beet sugar refining this year to 3.1-3.2 million tonnes from previous 3.3 million, due to "gloomy prospects of sugar beet ripening conditions".

Russia's sugar industry lobby the Russian Sugar producers' union expects the country's beet sugar output to be 3.2-3.5 million tonnes, down from an earlier expected 4 million tonnes.

IKAR has earlier said it expected the output to be 3.3-3.4 million tonnes, but it may fall to 2.8 million tonnes.

White sugar prices in South of Russia, where harvesting is ongoing, are gradually growing, as demand still exceeds supply.

By the end of last week white sugar prices in Krasnodar reached 27,000 roubles or $887 per tonne in comparison with 26,300 roubles and $881 per tonne a week before, IKAR said.

Source: Reuters  |  #grain   |  Comments: 0   Views: 37

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