Russian domestic wheat prices likely to rise

Russian domestic wheat prices are likely to hit new highs this week as state sales from interventions stocks are unable to meet demand in the drought-hit market, Russia's Institute for Agricultural Market Studies (IKAR) said in a note on Monday.
One of the world's key wheat exporters, Russia aims to sell up to 1.25 million tonnes of grain from its 5-million-tonne stocks, after hot and dry weather slashed its wheat harvest by a third, raising domestic prices. Russia's average domestic EXW (ex-silo) prices in the European part of the country for third-grade wheat rose 150 roubles to 10,400 roubles ($330) per tonne last week, a new record level in rouble terms, SovEcon agriculture analysts said in a separate note.
Prices for fourth-grade milling wheat and for fifth-grade feed wheat rose 150 roubles to hit 10,350 roubles per tonne and 9,900 roubles per tonne respectively, SovEcon said. Average wheat prices in Siberia and Urals regions added 200-300 roubles last week. The Russian government plans to sell up to 130,000 tonnes of grain per week from October 23 until the end of the year. It has already sold 568,279 tonnes of grain during the first 10 tenders. Russia's grain exports could reach 15.5 million tonnes in the current crop season, the Agriculture Ministry said last week, way above this year's exportable surplus and bringing stocks down to critically low levels.
Meanwhile, Russia exported more than 11.7 million tonnes of grains, including 8.84 million tonnes, from the start of the 2012/13 marketing year on July 1 through November 20, IKAR added. Russian wheat remains uncompetitive on global market with prices around $10 higher than for Paris benchmark January milling wheat, which were up 0.65 percent to 271.50 euros ($350) a tonne by 1030 GMT.
The purchase price of fourth-grade milling wheat in Russian deep-water ports were flat at 11,200 roubles ($360) per tonne last week on a carriage-paid-to (CPT) basis, SovEcon said. Prices for wheat with 12.5-percent of protein content in the Black Sea export ports were q uoted at $355 per tonne on a free-on-board (FOB) basis last week, up $5, according to IKAR.