Russian wheat export prices may rise further this week if demand from Egypt remains strong, making French wheat more competitive in the global market, analysts said on Monday. The world's top wheat importer, Egypt has been making purchases amid concerns in the market that supplies are dwindling in the Black Sea region due to drought. Some traders suspect Russia, which is trying to cope with a drought that has slashed grain yields by more than a quarter, may curb exports, although the government has repeatedly dismissed such concerns.
Egypt bought 60,000 tonnes and 120,000 tonnes of Russian wheat in two tenders last week, the last of which showed that Russian and French wheat prices have achieved the same level, SovEcon agriculture analysts said on Monday. Egypt's General Authority for Supply Commodities (GASC) agreed to buy Russian origin for $350.1-350.3 per tonne with freight of $10.9 per tonne, while French origin was acquired for $347 per tonne with freight of $13.9 per tonne.
"If GASC holds one more tender in the near future, it is likely that prices will rise further," SovEcon said. Chicago wheat fell 1 percent on Monday from Friday's five-week top as favourable weather for the US winter crop planting and supplies from India weighed on the market.
The grain markets got a boost last week following the US Federal Reserve's latest stimulus plan which is expected to buoy risk appetite. But the progress of corn and soybean harvest in the US Midwest prompted investors to sell. The average Russian prices for fourth-grade milling wheat in deep-water ports rose to 9,900-10,000 roubles ($320-330) per tonne last week from 9,700-9,900 roubles on a carriage-paid-to (CPT) basis, SovEcon said.
"The world market is willing to pay a premium price to keep Russian exports engine working," Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), said in a note. IKAR saw Russia's Black sea index for 12.5-percent wheat at $330 per tonne last week from $319 per tonne, while October future prices were quoted at $334 per tonne and November delivery - at $340 per tonne on free-on-board (FOB) basis.
SovEcon quoted prices for 11.5-percent wheat at $342-350 per tonne, up from $325-335 per tonne on FOB basis. Maize (corn) was estimated at $296 per tonne last week, down from $305 per tonne, due to decreased prices for Ukrainian origin and weak demand from Turkey, one of biggest importers, Rylko added in a note.
Wheat prices in shallow-water ports reached 9,200-9,400 roubles per tonne last week, up from 9,100-9,200 roubles, according to SovEcon. Russia's average domestic EXW (ex-silo) prices for third-grade and fourth-grade milling wheat were up 100 roubles at 8,450 roubles per tonne and 8,425 roubles respectively, SovEcon added. For sunseeds, the price index for the new harvest rose by 945 roubles to 17,345 roubles ($570) per tonne, according to IKAR. SovEcon saw it at 17,625 roubles per tonne, up 1,000 roubles, and added that some sellers in South regions quoted prices at 20,000 roubles per tonne.
The crude sunoil price index rose to 41,175 roubles per tonne, up 175 roubles, or to $1,330 per tonne from $1,275 per tonne, IKAR said. SovEcon pegged domestic prices at 41,500 roubles per tonne, down 325 roubles. Soybean price index in the South of Russia rose to 15,700 roubles per tonne from 15,500 roubles per tonne, or to $564 per tonne, up $18.
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