Russia's Agriculture Ministry will boost grain purchases for state stocks as soon as its higher prices are approved and may buy up to 1.5 million tonnes on the domestic market by January, said Andrey Sizov, head of agriculture consultancy SovEcon. The ministry has said it proposed raising its prices for the state restocking programme by 1,000 roubles ($16) per tonne on average. Its order is widely expected to be approved by the Justice Ministry soon.
"The price increase will significantly boost grain purchases for the state fund," Sizov said, adding the higher prices will turn the government into a competitive wheat buyer in the Siberian market. Russia's eastern regions usually play a minor role in its exportable wheat surplus as most supplies sent abroad go from the southern regions where all major Black Sea ports are based.
In total the government is ready to buy up to 2 million tonnes of grains for its stocks, of which it currently has 1.9 million tonnes, SovEcon added. According to the ministry, the country should have no less than 3.5 million tonnes of grain in these stocks. The ministry currently uses different prices in the European and Asian part of Russia. The new prices, once approved, will be common for the whole country. Domestic prices for third-class wheat rose 75 roubles to 10,300 roubles per tonne in the European part of Russia at the end of last week. In Siberia, prices jumped 1,000 roubles to 10,250 roubles per tonne ahead of the government decision.