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IKAR in Mass Media

Russian wheat prices rise, Iran seen helping gains

21 февраля 2012 года

MOSCOW, Feb 20 - Russian domestic wheat prices continued to rise on export purchases, including possible demand from Iran, though export prices weakened as adverse weather hampered loadings in Black Sea ports, analysts said.

"An additional new support factor for the market is the Iranian story," SovEcon analysts wrote in a weekly market roundup, citing a Reuters report that Iran had purchased 1.1 million tonnes of wheat and was seeking Russian supplies.

"If that is the case, a reversal of the uptrend could be delayed."

Steady gains in Russian wheat prices have been threatening to price the country's exporters out of their key markets.

As things stand now, Russia will sit out early April deliveries to Egypt, whose General Authority for Supply Commodities, Russia's biggest buyer, took its business to U.S. exporters instead.

Delivered to port, fourth class milling wheat with 11.5 percent protein content rose by about $10 in the main export outlet of Novorossiisk and was pegged at 8,300-8,400 roubles per tonne ($277-$280), SovEcon said.

"On one hand, taken together with possible market interventions, this (poor export economics) creates precursors for a reversal of the uptrend on the market," SovEcon said. "On the other hand, the closer we get to the end of the season, the stronger the support from low carryover stocks."

After a rush to export in the early months of the season, exporting regions were left with lower grain stocks than they had a year ago after the drought of 2010, which destroyed a third of the crop and prompted the government to ban exports.

Exports have averaged more than 2.75 million tonnes per month in the seven months since the export ban was lifted, but they slowed dramatically in the first two weeks of February, the Institute for Agricultural Market Studies (IKAR) said.

As of Feb. 12, total grain exports for the crop year so far stood at 19.85 million tonnes the end of January, implying just 250,000 tonnes were shipped in the first 12 days of the month.

Of the total 19.85 million tonnes, Russia exported 16.4 million tonnes of wheat between July 1 and Feb 12, IKAR said.

Azov Sea ports, which handle up to 1.2 million tonnes of grain in peak months, remained frozen, while adverse weather in the Black Sea made loadings chaotic, which in turn damped down prices for export grain.

IKAR pegged prices for wheat with 12.5 percent protein content at $281 free on board (FOB) basis Novorossiisk, down about $4.

"Shallow water ports have been totally frozen, without any activities. Only talks on forward deliveries not earlier than middle of March have been taking place," analysts from the Institute for Agricultural Market Studies (IKAR) said.

"Russian Black Sea grain terminals have been functioning rather sporadically all the previous week.

On sunseeds, dollar prices declined further to $361 per tonne from $372, IKAR said, while SovEcon pegged average prices slightly higher at $370. The crude sunoil index fell to $1000 from $1031, IKAR said.

SovEcon said sunoil export prices strengthened in line with world markets, and pegged them at $1,100-$1,120 per tonne FOB basis in Black Sea ports.

Against a background of weakening supply, domestic white sugar prices continued to strengthen in roubles to 24,800 roubles per tonne from 24,600 roubles per tonne.

($1 = 29.9300 Russian roubles)

Source: Reuters  |  #grain   |  Comments: 0   Views: 77

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