Russian grain prices kept declining last week due to rising new-crop volumes and a lack of clarity about the government's plans to sell grain from its stocks. Harvesting is well ahead of last year's progress. By August 6, the country had harvested 35.1 million tonnes of grain from 10.7 million hectares, 7.2 million tonnes more than a year ago.
Export activity remained low. Many firms took a break due to unclear government intervention plans. The key question for market players is when the government may sell 1.45 million tonnes of milling wheat and 0.05 million tonnes of milling rye.
Economy Minister German Grief said last week the government may announce the sale shortly, but no definite statement came from the Agriculture Ministry.
In spite of the unclear government position, exporters are not planning to suspend acquisitions. World prices are rising, with French milling wheat approaching levels of $320 per tonne, while domestic prices are declining.
This raises the profitability of export operations and lowers the risks linked to possible export restrictions. Grain prices kept declining, led by feed wheat, which lost 100-150 roubles per tonne last week. Demand for feed wheat from both exporters and the domestic market was low, while supply was high. Volumes were also high, as in many regions some milling grain was infested by wheat bug after a warm winter and its grade had to be lowered as it is unsuitable for bread baking.
Milling wheat lost just 50 roubles per tonne on average. Traders reported exporters' fourth-grade wheat bid prices in the region of 6,400-6,600 roubles per tonne CPT at deep-water and shallow ports. Activity on the oilseeds market was low. Some offers on rapeseed were registered at 8,500-8,900 roubles per tonne. Traders declared new-crop sunseed at a price of 9,000 roubles per tonne.
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