New-crop wheat in Russia will start the season priced at least 15 percent higher than a year ago due to lower end-of-season stocks and scorching temperatures that are threatening the harvest, traders and analysts said.
The price of new-crop feed barley, under even greater threat from drought, will be 68 percent higher at the end of July than year, market participants surveyed by analyst group SovEcon said. Prices would continue to rise strongly in the first half of the season to the end of calendar 2007, SovEcon Executive Director Andrea Seizo JR. told an industry meeting.
"The May drought affecting the eastern European Union, Ukraine and the south of Russia will stimulate an increase in prices. It's possible that Ukraine could limit exports," Sizov said late on Monday. SovEcon estimated high exports in the last three months would leave end-of-season grain stocks at 9.3 million tonnes, compared with 10.2 million tonnes last season.
"This is the lowest level in the last five years," Sizov said. He added that reduced harvests in North Africa and Turkey, traditional buyers of Russian grain, would boost prices.
The results of the SovEcon survey showed the price of fourth-grade wheat from the new crop at 3,750 roubles ($144.9) per tonne, EXW North Caucasus, in the last 10 days of July 2007. "We can expect an active increase in prices, which could reach a level of 4,500 roubles ($173.9)," Sizov said. SovEcon supplied the following price forecast.
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