Russian wheat prices up on higher demand

Russian wheat prices rose further last week, supported by higher demand after a cut in wheat export tax, analysts and a trader said on Tuesday. The market had been expecting the tax cut for several weeks before the order went out on September 30 and farmers had been holding their wheat, while exporters had signed many supply deals, the trader said.
"Now there is a technical bottleneck: many ships came in and exporters need to buy volumes to load ships, while farmers are in a good negotiating position," he added. Russia, one of the world's key wheat exporters to North Africa and the Middle East, cut the tax as of October 1. Black Sea prices for Russian wheat with 12.5 percent protein content for November were up $2 from October prices at $197 per tonne on a free-on-board (FOB) basis at the end of last week, agriculture consultancy IKAR said in a note.
SovEcon, another Moscow-based consultancy, said FOB prices were up $2 at $201 per tonne. According to IKAR, prices for wheat with the same protein content in the Azov Sea were up $2 to $167 per tonne, while November FOB prices for corn (maize) were flat at $167 per tonne. Egypt, one of the world's biggest importers of wheat, bought 180,000 tonnes of Russian wheat at $201.98-203.90 per tonne on October 15. It also bought 60,000 tonnes of Romanian wheat at $203.45 a tonne on a FOB basis.
The Russian government is yet to restart a grain restocking programme at higher prices, approved on October 15. The purchases are expected to start after October 24 but their effect has mostly been factored into current prices, SovEcon said. Domestic prices for third-class wheat rose 200 roubles from a week earlier to 10,550 roubles ($169) per tonne in the European part of Russia, on an ex-works basis, SovEcon said.
Russia's grain stocks at farms and at procurement and processing companies, excluding small farms, were down 0.9 percent from a year earlier to 43.8 million tonnes as of October 1, data from the statistics service Rosstat showed. SovEcon also said average prices for sunflower seeds were down 775 roubles at 24,250 roubles per tonne. Domestic sunflower oil prices fell 1,650 roubles to 49,175 roubles per tonne, while export prices were up $10 at $770-$780 per tonne. IKAR's white sugar price index for southern Russia was at $619 per tonne, down $24 from a week earlier.