Russian wheat prices down on high supply, stocks

Russian wheat prices declined last week due to high supply from farmers who need cash for spring sowing and also due to high levels of stocks, analysts said on Monday. Black Sea forward prices for Russian new crop wheat with 12.5 percent protein content were at $193 per tonne on a free-on-board (FOB) basis at the end of last week, down $14 from a week earlier, according to IKAR consultancy.
FOB prices for milling wheat from last year's crop were down $1.50 to $197 per tonne, another consultancy SovEcon said. Russia, one of the world's largest wheat exporters to North Africa and the Middle East, imposed a tax on wheat exports between February 1 and June 30 in an effort to cool domestic food inflation as the rouble tumbled.
The government will decide in May or June whether to cancel the tax or to extend it beyond July 1, when the 2015/16 marketing year starts. In case the tax is removed, wheat prices in Russia's south may rise by about $10 per tonne by July, SovEcon said. Russia's wheat exports have been slowed by the tax, but some importers continue to sign new deals: Egypt's state buyer, the world's biggest importer of wheat, agreed to buy 300,000 tonnes of French, Russian and Romanian wheat in a tender for shipment between June 5 and June 15.
In particular, it agreed to buy 60,000 tonnes of Russian wheat at $212.50 a tonne on FOB basis. On the supply side, Russia's spring grains sowing campaign has been delayed by recent cold weather: spring grains have been sown on 2.6 million hectares, 8.5 percent of the planned area, down from 2.9 million hectares at the same date a year ago.
However, IKAR has raised Russia's 2015 wheat crop forecast to between 54 million and 59 million tonnes from a previously expected 52 million-57 million tonnes due to the good condition of winter grains and high soil moisture levels in Siberia. Domestic prices for third-class wheat were down 200 roubles at 9,450 roubles per tonne in the European part of Russia on an ex-works basis, SovEcon added.
In the domestic sunflower seed market, SovEcon said prices fell 200 roubles to 21,075 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 $775 per tonne, up $33 from a week ago.