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Russian wheat prices up on higher global benchmarks, crop delay

Reuters, 19.06.17

MOSCOW, June 19 (Reuters) - Russian wheat export prices have risen for a fifth week on the back of higher global benchmarks and due to a possible late arrival of the domestic harvest after rainy weather in the spring, analysts said on Monday.

High demand from Egypt, the world's largest wheat importer, and Russia's new rules on strict value-added tax accounting for the agriculture sector also added to support, they said.

Russian Black Sea prices for new crop wheat with 12.5 percent protein content and for July delivery rose $2 at the end of last week from a week earlier to $185 per tonne, the IKAR agriculture consultancy said.

SovEcon, another Moscow-based consultancy, put Black Sea new crop prices at $180-183 a tonne, up $4 from a week earlier. Prices for the old crop rose $0.5 to $189.5 per tonne.

"Agriculture producers in many central and southern regions estimate the delay in crop harvesting at 2-3 weeks," it said.

Chicago wheat futures slid on Monday as the market paused after rallying around 5 percent in the last two sessions on the back of dry weather hitting U.S. yields.

Russia exported 34.3 million tonnes of grain, including 26.3 million tonnes of wheat, from July 1 to June 14, the agriculture ministry said. That equated to a 3 percent rise year-on-year.

Spring grain sowing has caught up with last year's pace after a gap of 200,000 hectares a week earlier, thanks to more active wheat and barley sowing. As of June 15, farmers had sown spring grain on 99.2 percent or 30.8 million hectares of the planned area, the ministry said.

Spring wheat sowing on 13.1 million hectares is 96.4 percent done so far, down 500,000 hectares from the same date a year ago.

"The size of spring wheat sowing area will probably be lower than we expected (13.4 million hectares) which creates preconditions for a crop forecast downgrade," SovEcon said.

SovEcon currently sees Russia's 2017 wheat crop at 70.8 million tonnes, compared with a median estimate of 68.0 million tonnes seen in last week's Reuters poll.

Egypt's state grain buyer GASC purchased 300,000 tonnes of wheat in a tender on June 13, including 180,000 tonnes of Russian wheat.

Traders have said that Russia's new domestic rules on strict value-added tax accounting brought additional risks and may affect domestic purchases.

Domestic prices for third-class wheat were unchanged from a week earlier at 9,150 roubles ($157.6) a tonne in the European part of Russia on an ex-works basis, SovEcon said. Ex-works supply excludes delivery costs.

Russian sunflower seed prices rose by 125 roubles to 18,750 roubles a tonne, SovEcon said. Domestic sunflower oil prices rose 100 roubles to 40,925 roubles a tonne, while export oil prices remained at $715 a tonne.

Russia's May exports of 78,0000 tonnes of sunseed were the highest in the last 11 years, it said. The country exported 275,300 tonnes of sunseed in October-May, six times more than in the same period of the previous season.

IKAR's white sugar price index for southern Russia rose by $24.3 to $699.9 a tonne as of June 16.

($1 = 58.0686 roubles)

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