Russian wheat prices rise after Egypt drops ergot ban policy

26.09.2016

Russian wheat export prices rose last week for the first time since mid-August, buoyed by demand from Egypt after it dropped its policy of not importing wheat containing the ergot fungus, agricultural consultancy IKAR said.

Egypt's state importer GASC bought 240,000 metric tons of Russian wheat last week, in its first successful tender purchase since abolishing the rule. Egypt is the biggest buyer of Russian wheat.

Black Sea prices for Russian wheat with 12.5 percent protein content for October delivery were $169 a metric ton on a free-on-board (FOB) basis at the end of last week, up $2 from a week earlier, IKAR said in a note on Monday.

SovEcon, another Moscow-based consultancy, also pegged prices at $169 per metric ton.

Cairo is yet to approve delivery of another Russian wheat cargo, which was delayed by its ergot policy.

Moscow suspended imports of fruits and vegetables from Egypt from Sept. 22, although it said the move was not a counter-measure against Cairo's wheat policy. A delegation from Cairo is expected to discuss the ban on Egyptian fruit and vegetables with Russian officials in Moscow on Monday, Sept. 26.

Gains in Russian wheat prices may prove to be shortlived, SovEcon said: "The probable resumption of (wheat) supplies to Egypt may somewhat support Russian wheat export prices, but ... it will not be enough for a fundamental change in the situation in the domestic market."

Russia exported 7.8 million metric tons of grain, including 6.6 million metric tons of wheat, between July 1 and Sept. 21, the agriculture ministry said. Grain exports were down 9 percent year on year. Official customs data has lagged real supplies this year due to technical issues, analysts have said.

Domestic prices for third-class wheat fell for the first time since early August as some farmers gave up hope that prices would increase, SovEcon said.

Prices fell 25 roubles last week to 10,175 roubles ($159) per tonne in the European part of Russia on an ex-works basis. Ex-works supply does not include delivery costs.

New crop sunflower seed prices dropped by 50 roubles to 22,250 roubles per tonne, SovEcon said, while domestic sunflower oil prices fell by 575 roubles to 50,500 roubles and export oil prices were unchanged at $760 per tonne.

IKAR's white sugar price index for southern Russia fell $11 last week to $541 a tonne at the end of the week.


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