Russian domestic wheat prices are powering to record highs, unfettered by an export tariff that has blocked shipments from its Black Sea ports, and raising the need for more restrictions to keep grain inside the country. As booming world wheat prices show no signs of slowing, Russian exports may soon become competitive again.
Moscow has already signalled its intention to extend the 40 percent export tariff until July 1 and traders do not rule out further limits. "We're in a situation that has never happened before," Walenty Sielwiesiuk, head of overseas trade at major Russian grains company Nastyusha, said.
"Russian domestic prices are going up and, for the moment, we have no sign of any push down on the market." Wheat, the world's most-exported grain, has hit record highs due to drought, rising food demand and increased use of grains for environmentally friendly biofuels. Russia and its ex-Soviet neighbours Ukraine and Kazakhstan have restricted exports to battle inflation fuelled by rocketing food prices.
Russia's Agriculture Ministry said last week it planned to extend a wheat export tariff of 40 percent, or no less than 105 euros ($159.5) per tonne, until July 1 to preserve domestic stocks. The tariff had been due to expire on May 1.
"Whether this tariff can completely halt exports is open to question. Despite its high level, Russian grain could again become competitive with a new jump in world prices," SovEcon agricultural analysts said in a weekly market commentary. Agriculture Minister Alexei Gordeyev has forecast grain exports could reach 15 million tonnes in the current 2007/08 crop year, Russia's second-largest ever volume of exports. He said this before his ministry proposed the tariff extension.
Russia had exported 11.5 million tonnes of wheat this season by February 25, the Institute for Agricultural Market Studies (IKAR) said, almost as much as it exported in the whole of last season.
LOWER CROP: Analysts say Russia's 2007 crop may have been substantially lower than the 81.8 million-tonne official estimate. If this proves to be true, prices would likely rise further.
Russian ports are no longer shipping wheat, although traders said it was still possible to acquire Russian-origin grain on the market. A Switzerland-based trader said Russian wheat via Ukraine had been sold at a $425 per tonne, free-on-board. In the fast-rising domestic market, Russian third-grade wheat for domestic consumption increased in value to $355 a tonne last week from $330 in the fertile Black Earth region.
IKAR general director Dmitry Rylko said the introduction of export tariffs had seen a switch in price-basis composition from Russia's export-oriented southern regions to key regions of domestic consumption.
SovEcon said those in possession of grain were holding back their stocks in anticipation of higher prices, despite deteriorating storage conditions. Many big traders were also in the frame, buying grain in Russia's regions for future sale.
SovEcon also noted Russian exporters had participated in the latest tender by Egyptian state wheat buyer GASC at a price of $495 per tonne, after failing to bid at several recent tenders.
BARLEY, SUNSEEDS: SovEcon said third- and fourth-grade wheat rose 400 roubles a tonne in the domestic market over the last week. Feed wheat rose 450 roubles, pulling other feed grains up in its wake.
IKAR said the further devaluation of the dollar against the rouble pushed domestic feed barley prices up to $298 per tonne from $280. Barley exports from Russia have also stopped as a result of a prohibitive 30 percent tariff.
Sunseed prices also continued to grow. SovEcon said they rose 400 roubles in the last week, with large crushers buying at 20,000 roubles a tonne. IKAR said domestic sunoil prices had reached $1,860 per tonne compared with $1,803 a week earlier. Export prices were unchanged at $1,720-1,730 per tonne, giving no price advantage to exporters.
Comments
Comments are closed.