Russia grain rises on export demand, tight supply

Russian grain prices rose last week as supply tightened and demand from exporters stayed high, analysts said on Monday. Domestic wheat prices have risen substantially due to a supply shortage, caused partly by the accumulation of grain in government intervention stocks, the Institute for Agricultural Market Studies (IKAR) said.
But rising prices and a stronger rouble are now making Russian grain less competitive on international markets, SovEcon agricultural analysts said. The rouble rose about 1.8 percent last week against the euro-dollar basket, hitting four-month highs. Fourth-grade milling wheat prices rose to 6,300-6,400 roubles ($202-$205.2) per tonne, CPT Novorossiisk, SovEcon said. Third-grade wheat rose to 6,800-6,900 roubles per tonne.
Ordinary (fourth-grade) wheat FOB export prices remained at the relatively strong level of about $195 per tonne from the Black Sea port of Novorossiisk, IKAR said. IKAR said domestic third-grade wheat prices reached $186 per tonne, fourth-grade wheat $162 per tonne and fifth-grade feed wheat $135 per tonne ex-silo in southern Russia. Feed barley was largely unchanged at $108 per tonne, while the average maize price moved up to $131 per tonne last week.
SovEcon said most domestic grains prices rose by 100-175 roubles per tonne in the European part of Russia and wheat flour rose by 50 roubles. SovEcon said the government might tender the rights to export 2 million tonnes of grain from its intervention stocks. If this happens, grain stored in southern Russia may be offered for the tender first, in order to free up silos for the new-crop grain and accumulate money needed for storage.
But such a development may hurt prices, as purchases of grain from the state may in turn reduce purchases from producers when the sale of new-crop grain begins, SovEcon said. Crude sunoil prices strengthened last week by an average of 175 roubles per tonne following a rise in prices in the North Caucasus region, SovEcon said.
Sunseed prices also added 175 roubles per tonne after some crushers raised purchase prices. Sunoil export prices rose, but at a lower rate than in previous weeks. Prices were around $830 per tonne, FOB Novorossiisk. Domestic sunseed prices have increased to $302-308 per tonne, IKAR said. Last week, sugar prices rose to $700 per tonne from $673 the week before. Prices rose in rouble terms as well, IKAR said.