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Russian wheat prices fall to 23-month low -SovEcon consultancy

Reuters, 07.09.19

MOSCOW, Sept 7 (Reuters) - Export prices for Russian wheat fell this week for the sixth consecutive week and reached their lowest level since October, 2017 amid strong competition from other producers, Russian agricultural consultancy SovEcon said on Saturday.

Black Sea prices for wheat with 12.5% protein content fell by $2.50 from the previous week to $186.5 a tonne on a free on board (FOB) basis, SovEcon said.

Barley was steady at $177 a tonne.

Attention of traders in Europe has been focused on a purchase tender by Saudi Arabia's state grain buyer SAGO for 595,000 tonnes of wheat, the first from Saudi Arabia to allow wheat offers from the Black Sea region.

Tender results are expected on Monday.

Wheat from the Black Sea did not previously meet Saudi specifications for zero-pest damage, but the latest tender document showed the agency would accept a more relaxed requirement for bug damage of up to 0.5%.

"Russian suppliers are expected to win at least part of the tender," SovEcon said. Average bug damage for wheat in Russia's southern regions is currently at around 0.6% this year, it said.

"So getting a 0.5% wheat should not be a problem," SovEcon said, adding that Ukraine could also participate in the tender but, according to SovEcon, it could be more challenging to find wheat with low bug damage there.

Russia has exported 9.8 million tonnes of grain since the start of the 2019/20 season, 12% less than in the same period of the previous year, SovEcon said. That figure included 8.5 million tonnes of wheat.

On the domestic market, prices for third-class wheat fell by 75 roubles to 10,450 roubles ($159) a tonne at the end of last week in European parts of Russia on an ex-works basis, SovEcon said. Ex-works does not include delivery costs.

Russian farmers have already sown winter grains for next year's crop on 29% of the planned area, or on 5.0 million hectares.

"The weather has been dry in previous few weeks and there are almost no rains expected in the next two weeks. Risk of poor development of the 2020 winter wheat is gradually rising," SovEcon said.

Sunflower seed prices were steady at 20,100 roubles a tonne, while domestic sunflower oil prices fell by 400 roubles to 46,100 roubles a tonne, it added. FOB export prices for sunflower oil for October shipment rose by $5 to $710 a tonne.

IKAR, another agriculture consultancy, said its price index for white sugar from southern Russia fell by $4 to $349.7 a tonne.

($1 = 65.7725 roubles)

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