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IKAR in Mass Media

Wheat market cooled, not sunk by Russia's return

17 июня 2011 года

PARIS, May 30 (Reuters) - European wheat prices slid on Monday after Russia announced an end to its grain export ban from July but doubts over the scale of Russian shipments plus weather woes elsewhere should limit a correction, traders said.

With Chicago futures, the world benchmark for grain prices, not trading due to a public holiday in the United States, initial reaction centred on European futures, with the most active contract plunging nearly 5 percent at the open.

The re-launch of Russian exports had been widely expected, but Saturday's official announcement by Prime Minister Vladimir Putin still stirred a European market that has rallied in the past year partly as Russia's ban tightened global export supply.

"Even if it was expected for some time, it's still going to have an impact," a French futures broker said. "We're liable to see some speculative or short selling but I don't think we're going to fall back to 200 euros."

November wheat on Euronext was down 4.2 percent at 240.50 euros a tonne by 1518 GMT. It briefly hit 239.25 euros in early deals before holding above support at 240 euros.

The closing level in Paris on Monday should prompt a similar adjustment in Chicago futures the following day, although the impact would depend on other news, especially crop weather, traders and analysts said.

"There will inevitably be a technical correction effect in the U.S. market, after that we should see a return to (crop) fundamentals," Helene Morin of French analysts Agritel said.

Drought in some winter wheat areas have supported Chicago wheat prices, while soggy conditions further north have hampered spring-wheat sowing, driving Minneapolis futures to a highest close since 2008.

Paris wheat futures, meanwhile, have notched up contract highs this month, with November hitting 254.50 euros on Friday, as a worsening drought in the European Union's top grain producer has cut the harvest outlook.

RUSSIAN VOLUMES UNCLEAR

Russian wheat prices have been rising in anticipation of exports, especially in the key southern exporting region where prices last week for third-grade milling wheat rose to around $202 a tonne last week from $198 the prior week, according to IKAR analysts.

But despite the prospect of competitively priced Russian wheat coming back onto the world market from July 1, after an embargo imposed last August following a drought-ravaged harvest, traders do not expect a severe correction in world markets.

Putin did not give details on how the export resumption would be managed, beyond reiterating the government would monitor the situation, and traders doubted there would be no-strings-attached exports.

"I consider that we must wait and see the terms -- that is, if there are any," one export trader said. "I don't think they will open without any restriction, be it time, volume and maybe an export tax or subsidies."

This cautious tone was echoed by the state buyer in Egypt, the world's largest wheat importer whose No. 1 supplier was Russia prior to last August's embargo.

"Putin said (Russia) will begin exporting and 'monitor'," Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC), told Reuters. "Does that mean there could be a new decision to ban its (wheat) exports?"

"We do not want to fall into the same problem we fell into last year," he said. Egypt was forced to scramble to replace more than 500,000 tonnes of Russian wheat purchases when Moscow imposed the ban.

While crop growth has been healthy in Russsia so far this campaign, prompting a grain lobby to refer on Monday to a grain export potential of 15-20 million tonnes , observers warn crops still have to get through June.

"We have seen in the past few years, the first two weeks of June are very delicate for Russian and Ukranian crops," Morin said. "The volume (of Russian exports) will depend on weather conditions between now and the harvest."

Some exporters were already making deals to sell Russian wheat but said it was risky to commit large volumes.

"As things stand today, I have sold shiploads to private customers but I do not plan to bid Russian wheat in big tenders such as for GASC in Egypt or in Jordan," one trader said.

Source: Reuters  |  #grain   |  Comments: 0   Views: 35

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