Russian wheat prices continued to decline last week because of a stronger rouble, higher stocks in main producing regions and a seasonal increase in supply from farmers who needed cash for the spring sowing, analysts said on Monday.
Stocks are high after a near record crop last year, and local prices have also fallen due to the government imposing a wheat export tax to slow down food inflation following the collapse of the rouble at the end of 2014.
At the end of last week, Black Sea prices for wheat with 12.5 percent protein content were down $3 on the week at $197-$202 per tonne on a free-on-board (FOB) basis, SovEcon agriculture consultancy said in a note.
Domestic prices for third-class wheat were down 225 roubles at 9,725 roubles ($172) per tonne in the European part of Russia on an ex-works basis, or when the seller delivers their goods, it added.
SovEcon expects Russia's grain stocks to reach 15 million tonnes at the end of this marketing year on June 30, up from 9-10 million tonnes in the last two seasons.
The tax on wheat exports that took effect on February 1 is due to be removed after June 30. But Deputy Prime Minister Arkady Dvorkovich, who is in charge of the agriculture sector, said on Friday that the government may extend it.
Officials have yet to decide on the matter, leaving traders uncertain and delaying forward contracts for the new marketing year, analysts said.
"Large traders did not fix (deals) even before these comments. Now others may also start to delay contracts," Dmitry Rylko, the head of SovEcon agriculture consultancy, said.
According to Dvorkovich, the government will discuss the tax this week. The duty on wheat exports is set at 15 percent of the customs price plus 7.50 euros, but not less than 35 euros ($38) a tonne.
In the domestic sunflower seed market, SovEcon said prices fell 250 roubles to 21,375 roubles per tonne, while FOB Black Sea prices for crude sunflower oil were flat at $750-760 per tonne.
IKAR's white sugar price index for Russia's south was at $702 per tonne, down $16 from a week ago.
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