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The Russian government has set the prices at which it intends to start buying grain on the domestic market, but analysts said the prices were too low to create significant intervention stocks. The government has said it may buy up to 1.55 million tonnes of grain this year if it needs to stabilise the market. It authorised purchases in September without setting an exact timetable for market intervention.
A new government order published on its website www.government.ru sets the price for third class soft milling wheat purchases at 3,800 roubles ($135.8) per tonne, for fourth class at 3,000 roubles ($107.2) and for milling rye at 2,500 roubles ($89.32).
It said the prices included the cost of transport to authorised stores, loading and unloading, and cleaning and drying. The government intended to spend a total of 4.9 billion roubles ($175.1 million) on intervention, the order said.
Russia held grain purchase tenders in 2001-2003 to prop up prices after high crops. It sold most of the grain from its intervention stocks this year to curb prices.
Analysts saw limited government purchases. "It is highly unrealistic that the government manages to buy rye as its prices are already higher," said Andrea Seizo of SovEcon agricultural analysts.
"It may buy some wheat in the east of the country, where prices are lower, but not very much. Some grain owners may prefer to wait until next year, expecting the price to go up, and then sell it on the open market."
Vladimir Petrichenko of WJ interrogator trading company said the government might buy wheat in February or March 2005 if producers decided to sell to fund spring sowing.
"However, such a probability is not very high," Petrichenko said.
But he said the government order might stabilise the market. "The publication of this order will prevent prices from falling," he said.
Russia's official estimate for this year's grain harvest is 76 million tonnes, up from last year's low crop of 67.2 million.

Copyright Reuters, 2004

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