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Russian wheat prices up on global crop fears, local harvest delay

Reuters, 26.06.17

MOSCOW, June 26 (Reuters) - Russian wheat export prices have risen for a sixth week on the back of higher global benchmarks, inflated by fears of crop losses, and delayed local harvesting, analysts said on Monday.

Russia's new rules on strict value-added tax accounting for the agriculture sector also continued to add price support, they said.

Russian Black Sea prices for new crop wheat with 12.5 percent protein content and for July delivery rose $0.5 at the end of last week from a week earlier to $185.5 per tonne, the IKAR agriculture consultancy said.

SovEcon, another Moscow-based consultancy, put Black Sea new crop prices for supply in July-August at $183-186 a tonne, up $3 from a week earlier. Prices for July delivery in the Azov Sea were at $162 per tonne, IKAR added.

The price rise meant Russian wheat did not win the latest state tender in Egypt, the world's largest wheat importer and the biggest buyer of Russian wheat. Egypt's state grain buyer bought 175,000 tonnes of Romanian and Ukraine wheat last week.

"We think that uncompetitiveness of offers from Russia has a short-term nature," SovEcon said. "Russian exporters will probably be ready to compete more actively in the global market after the forthcoming start of wheat harvesting."

The rouble's weakening against the dollar due to lower oil prices will support exports at least near term, it added.

Russia exported 34.8 million tonnes of grain, including 26.6 million tonnes of wheat, from July 1 to June 21, the agriculture ministry said. That equated to a 3.5 percent rise year-on-year.

The ministry has not published the data on spring grain sowing since June 15, when it said that farmers had sown spring grain on 99.2 percent or 30.8 million hectares of the planned area. Spring wheat sowing on 13.1 million hectares is 96.4 percent done so far, as of mid-June.

Farmers in Russia's southern regions say harvesting was delayed by one-three weeks this year due to wet weather. Dry and warm weather is expected to favour the start of active barley and wheat harvesting in one or two weeks, SovEcon said.

The first data from farmers of the Krasnodar region show yields of winter barley unchanged from a year ago at five tonnes per hectare, it added.

Last week, SovEcon raised its forecast for Russia's grain exports in the 2017/18 marketing year, which starts on July 1, by 200,000 tonnes to 40.1 million tonnes. The estimate for wheat exports was raised by 300,000 tonnes from the previously expected level to 29.5 million tonnes.

Domestic prices for third-class wheat were up 100 roubles from a week earlier at 9,250 roubles ($156.6) 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 were unchanged at 18,750 roubles a tonne, SovEcon said. Domestic sunflower oil prices rose 575 roubles to 41,500 roubles a tonne, while export oil prices remained at $715 a tonne.

IKAR's white sugar price index for southern Russia fell by $9.9 to $689.9 a tonne as of June 23.

($1 = 59.0640 roubles)

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