Russian wheat prices drop on new-crop arrival

MOSCOW: Russian wheat prices fell last week on the arrival of the new crop and despite continuing risks to the harvest from the June heatwave, analysts said on Monday.

Black Sea new-crop prices for wheat with 12.5% protein content were $193 a tonne free on board (FOB) at the end of last week, down $2 from a week earlier, Russian agricultural consultancy IKAR said in a note.

SovEcon, another Moscow-based consultancy, quoted FOB wheat for July delivery down $5 at $193 a tonne. FOB barley prices rose by $2.50 to $168, it added.

Russia's 2019 grain harvesting started earlier than a year ago because of dry weather in several regions. As of July 5, farmers had harvested 19.3 million tonnes of grain with an average yield of 4.06 tonnes per hectare.

The yield remains higher than a year ago but below initial expectations of some analysts. SovEcon on Monday cut its forecast for Russia's 2019 wheat crop.

Rains are expected to come to Ukraine and Russia within two weeks and benefit spring grain crops, SovEcon said. However, they could miss Russia's southern regions, which are the main producers of wheat for export.

Domestic prices have been falling on the arrival of the new crop. Prices for third-class wheat fell by 250 roubles to 10,825 roubles ($170) a tonne at the end of last week in European parts of Russia on an ex-works basis, SovEcon said. Ex-works supply does not include delivery costs.

Russia exported 42.6 million tonnes of grain in the 2018/19 marketing season to June 30, according to SovEcon. That included 35.2 million tonnes of wheat.

During the first four days of the 2019/20 season, the country exported 36,000 tonnes of wheat, 107,000 tonnes of barley and 31,000 tonnes of maize (corn), the consultancy said. It expects July grain exports of 4.1 million tonnes.

The ministry did not sell grain from its stockpile last week. In the 2018/19 season it sold 1.8 million tonnes of grain, including 1.6 million tonnes of wheat.

Sunflower seed prices rose by 975 roubles to 19,950 roubles a tonne as growth in domestic sunflower oil prices continued. The latter added 400 roubles to 43,575 roubles a tonne, SovEcon said. FOB export prices for sunflower oil rose $10 to $710 a tonne.

IKAR said its price index for white sugar from southern Russia was at $425.9 a tonne on July 5, down $10.30 from a week earlier.