Russia may allocate one third of state wheat stock to Moscow

Russia is considering allocating 400,000 tonnes of wheat, or more than one third of its state stocks, to the city of Moscow, Russia's Union of Flour Millers said, a signal of the government's increasing efforts to curb food price inflation. The decision to give wheat to Moscow, with a population of 12 million, if approved, will be a rare move as the government usually buys and sells grain from its stock in auctions.
The agriculture ministry, which controls the 1.1 million tonnes of wheat in stock, declined to comment. The millers' union said in a letter to the Duma, the lower house of parliament, that it would be unfair if Moscow's officials get 400,000 tonnes of wheat to sell to a few city-based millers cheaper than current market prices.
In the letter, a copy of which was seen by Reuters, it asked the government to hold an auction to sell the wheat. Russia, one of the world's key wheat exporters to North Africa and the Middle East, has been trying to cool domestic grain prices since December, when it imposed informal curbs on exports. It added an export duty on wheat from February, but its measures are yet to have an impact as domestic prices continue to rise thanks to a weak rouble, which has lost 50 percent in value against the US dollar since early 2014.
The rouble slump, caused by weak oil prices and Western sanctions over the Russia's role in Ukraine, has boosted annual food inflation which hit more than 15 percent in December. The Union said there was no shortage of grain in the region as Russia had a near-record grain crop of 104 million tonnes in 2014 and "all grain consumers have an opportunity to buy it on the market," it added in the letter.
Grain stocks at Moscow's procurement and processing companies were down 31 percent from a year earlier to 75,500 tonnes at January 1, data from statistics service Rosstat showed. The Union also said it feared the decision to pass wheat to Moscow's firms would damage financial stability of other millers, which supply flour to Moscow from other regions. The government allocated grain to several regions in 2010 and 2011 when the country's crop was hit by drought and its wheat exports were banned.