Russian wheat prices hit new highs as imports rise
Russian wheat prices hit new highs last week, after a rise of 75 percent last year, due to tight supply and rising imports, a trader and analysts said on Monday. The Russian wheat export market is dormant as prices are far above competitive international levels, forcing some traders to switch to importing. "There are active shipments from Kazakhstan to the Volga and Central regions of Russia," the trader said.
Copyright Reuters, 2013
Russia, historically one of the world's largest wheat exporters, was hit by unfavourable weather in the 2011/2012 winter and drought in the spring of last year, which slashed its crop. The resulting depletion of grain stocks has sent domestic prices to record highs and raised fears of a deficit in the spring.
The government has held preliminary talks on a possible decision to remove a 5 percent grain import duty to help ensure adequate supplies, but Deputy Prime Minister Arkady Dvorkovich said the country was not yet ready to do it. SovEcon agricultural analysts said in a note on Monday that if the duty were to be lifted, it would shave $18 per tonne off the cost of delivering grain into St Petersburg, and that some wheat import prices are already competitive in parts of Russia's European region.
Last week, the average domestic EXW (ex-silo) price in the European part of the country for third-grade milling wheat rose 175 roubles to reach 11,625 roubles ($390) per tonne, while fourth-grade milling wheat was up 125 roubles at 11,575 roubles, SovEcon said. Fifth-grade feed wheat rose 150 roubles to 11,200 roubles per tonne last week, it said.
As for export prices, there were no deals involving Russian wheat in ports. Sale prices for maize (corn) exports were quoted at 9,300-9,400 roubles per tonne on a carriage-paid-to (CPT) basis, with market activity weak, SovEcon said.
Russian grain exports amounted to 13.87 million tonnes, including more than 10 million tonnes of wheat, by January 25, the Institute for Agricultural Market Studies (IKAR) said. Russian wheat stocks as of January 1 at farms (excluding small farms) and procurement and processing companies were down 40 percent from a year earlier, SovEcon said, citing Federal Statistics Service data.