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IKAR in Mass Media

Russian wheat prices up, sale of state stocks announced

06 августа 2012 года

MOSCOW, Aug 6 (Reuters) - Russian domestic grain prices rose last week on a worsening harvest outlook, prompting the government to announce the sale of government stocks to ensure sufficient domestic supply, while export grain prices slipped a few dollars from record highs.

The government has said it will deal with the poor harvest through the sale of intervention stocks and has so far rejected suggestions that it might curb exports.

Russia's average domestic EXW (ex-silo) price for third-grade milling wheat rose by 75 roubles to 8,375 roubles ($260) per tonne, while the fourth-grade price gained 25 roubles to 8,300 roubles per tonne, the SovEcon consultancy said in a note on Monday.

Russia's officials and analysts continued to cut their 2012 grain crop forecasts after hot and dry weather hurt yields in major producing regions.

Earlier on Monday SovEcon cut its forecast for the 2012 grain crop to 72 million to 75 million tonnes from the previously expected 78.5-81.5 million. Its wheat forecast dropped to 40.5-43 million tonnes from 46.5 million.

The lower forecasts fuelled market talk that Russia could resort to some sort of export restriction, two years after it banned grain shipments in the wake of a severe drought.

Traders are watching for confirmation of that approach on Aug. 8, when a government commission on food security, chaired by Deputy Prime Minister Arkady Dvorkovich, is expected to meet to discuss the grain market.

From April to June, Russia sold about 2 million tonnes of grain in state interventions and still has about 5 million tonnes in its stocks.

Intervention sales are likely to start in Siberia, where crops were damaged by a sustained drought and milling centres could fall short of supplies, two sources familiar with the plan said.

According to a draft document prepared by the Agriculture Ministry last week, sales from intervention stocks should start when prices rise from 4,550 roubles ($140) to 7,550 roubles per tonne, depending on the region and the year of harvest.

A lag between the time a local market reaches the high price levels and the start of sales of intervention stocks can be as long as several months, SovEcon said.

Meanwhile, Russia's wheat export prices decreased to $307 per tonne from $310 per tonne free-on-board (FOB) at the Black Sea port of Novorossiisk last week, Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), said in a note.

SovEcon pegged it at $310-315 per tonne.

Prices for wheat with 12.5 percent protein content were quoted at $275 per tonne at the shallow water Azov Sea terminals, according to IKAR.

Russian grain exports are off to a fast start in the new agricultural year, even while its exportable surplus has shrunk drastically in a drought.

According to IKAR, Russia exported 2.1 million tonnes of grain in July, of which wheat accounted for 1.8 million tonnes. SovEcon said that the country was likely to export 2.5 million tonnes of grain in August.

The price of fourth-grade milling wheat in deep-water ports last week was at 9,600-9,700 roubles per tonne on a carriage-paid-to (CPT) basis, up from 9,200-9,400 roubles per tonne, according to SovEcon.

Russia's wheat prices in shallow-water ports were stable at 8,700 to 8,800 roubles per tonne last week, it added.

In Chicago the front-month wheat contract fell 1.26 percent to $8.80 a bushel by 0950 GMT on Monday.

Russia has already harvested 30 million tonnes of grain as of July 31, while yields fell by 30 percent to 2.25 tonnes per hectare from last year's 3.19 tonnes, according to SovEcon.

Persistently high temperatures are expected in parts of Russia's Volga federal district, while parts of Siberia are expected to see rain, the State Hydrometeorology Agency said on its website in a weather forecast for Aug. 6-8.

IKAR said crude sunflower oil prices had strengthened to 40,000 roubles per tonne from 38,200 roubles, or in dollar terms to $1,232 per tonne from $1,171.

Sugar prices in southern Russia decreased to 25,200 roubles per tonne from 26,000 roubles, which in dollars was a fall to $776 from $797, it added.

($1 = 31.9977 Russian roubles)

Source: Reuters  |  #grain #sugar   |  Comments: 0   Views: 64

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