The US Agriculture Department's attache department released the following report, dated July 21, on prices of Russian grain and other products. Attache reports are not official USDA data. Grain prices continued to decrease during the past several months, led by the prices of feed quality wheat and barley.
From March through July 2004, the price of milling wheat decreased an average of 33 percent, feed wheat prices decreased an average of 35-37 percent, and feed barley prices decreased by 40-50 percent.
This decrease is being felt most strongly in the regions where harvesting has already begun. In the North Caucasus region, where harvesting is well under way, the estimated offer price of class three wheat decreased from a high of 6,390 rubbles ($224) per ton in March to 4,180 rubbles ($144) at the beginning of July.
The price of milling wheat has also decreased. For example, from a high in February-March 2003, prices for milling wheat have decreased by 29-31 percent in western Siberia, the Volga Valley and the Urals and by 33-35 percent in the Black Earth and central regions of the country.
The price of feed quality wheat decreased by 31 percent in the Urals, but is still more expensive (3,900 Rubles per metric ton) than comparable wheat in the black earth region where the price decreased by 40 percent to 3,450 Rubles per metric ton.
However, throughout the entire country wheat prices remain higher than in the beginning of MY 2003/04. Food quality rye prices dropped by 31-39 percent in July from their high last March, but remain more than two times higher than in the beginning of MY 2003. Feed barley prices dropped by 64 percent in the Volga Valley region, where the forecast for spring barley is good, but prospects for exports are not as good.
In the central and black earth regions of the country, the decrease in barley prices has been slower and prices have not yet fallen below the July 2003 level. In the Urals, barley prices decreased by only 38 percent and remain almost two times higher than a year ago. Given that the final crop is not forecast to exceed the yearly average of 75 million metric tons, prices will stabilise and begin to increase in the beginning of 2005. Experts do not expect prices to move close to the high reached in March 2004.
According to some experts, the price dynamics in MY 2003 confirmed two major changes in the Russian grain market. The first is that despite distances and different production conditions in the various grain producing regions of the country, prices did not differ very much.
As the charts below demonstrate, regional prices differed more at the beginning of marketing year than at the end. The second is that the grain market in the European part of the country is influenced more by international prices than by domestic conditions.
Bread and Grain Products Prices Bread and grain product (except millet) prices continued to increase, but at much slower rate than during last fall and spring. Even though grain prices are falling, millers and bakers cite the increasing cost of fuel, energy, and other input supplies for this price increase. Food consumption of grain is decreasing and this year's grain crop should meet domestic demand.
Factors that Will Influence Grain Prices in MY 2004/05 Grain prices in MY 2004/05 are forecast to be lower than in MY 2003/04. However, the difference in prices from region to region may vary a great deal and will depend on the closeness of the region to ports and other avenues of export and on the development of the domestic livestock and poultry sector. Government grain interventions may also influence prices.