Russian wheat prices up slightly as farmers holding on to their grain

10.04.2017

Russian wheat export prices rose slightly last week due to farmers holding on to their goods in the expectation of further price growth, Russian agriculture consultancy IKAR said on Monday.

Their hopes are supported by Russia's Economy Ministry scenario forecast, which sees the weakening of the rouble currency by the end of 2017. This would make Russian grain and other commodities more competitive on global dollar-denominated markets.

Black Sea prices for Russian wheat with 12.5 percent protein content for April delivery were at $188 a tonne on a free-on-board (FOB) basis at the end of last week, up $1 from a week earlier, according to IKAR. The price for May delivery was quoted at $187 per tonne.

"Farmers continue to hold their wheat," Dmitry Rylko, the head of IKAR, told Reuters. These agriculture producers are not in a rush to sell because they have enough funds to finance the current spring sowing.

Farmers have already sown spring grains on 3.8 percent of the planned area, or on 1.2 million hectares. The pace of sowing is slightly ahead of the previous year, according to the agriculture ministry data.

SovEcon, another Moscow-based consultancy, quoted wheat at $191 a tonne in deep-water ports at the end of last week, down $1, and unchanged at $167 a tonne in shallow-water ports. FOB maize (corn) prices rose $2 to $177 per tonne, it said.

Russia exported 28.7 million tonnes of grain, including 22.2 million tonnes of wheat, between July 1 and April 5, the agriculture ministry said, down 0.1 percent year-on-year.

The farmers, holding on to their grain, are limiting the activity in general and the effect from the high stocks on the domestic grain market, SovEcon said. Russia's grain stocks have remained at a high level for months after a record crop in 2016.

Domestic prices for third-class wheat fell 125 roubles compared with the week earlier to 9,700 roubles ($169) a tonne in the European part of Russia on an ex-works basis, according to SovEcon. Ex-works supply does not include delivery costs.

New-crop sunflower seed prices fell by 75 roubles to 18,000 roubles per tonne, SovEcon said, while domestic sunflower oil prices fell by 175 roubles to 41,575 roubles and export oil prices were flat at $705 per tonne.

IKAR's white sugar price index for southern Russia fell $9.5 to $581 a tonne as of April 7.


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