Russia to cut wheat prices for restocking programme

Russia's Agriculture Ministry has proposed cutting wheat prices for its restocking programme in the 2017/18 marketing year which starts on July 1, signalling stronger competition in the domestic market. The ministry, which has 4.0 million tonnes of grains in state stocks, buys grain on the domestic market every year in what are known as interventions.
It said in a statement released on Wednesday that it would offer 10,300 roubles ($183) for a tonne of third-class wheat in the domestic market during the 2017/18 year, compared with 10,900 roubles in the current programme. The proposal has been sent to the Russian anti-monopoly regulator for approval, the ministry added.
At the end of last week, domestic prices for third-class wheat, excluding delivery, were at 9,950 roubles a tonne in the European part of Russia. The domestic price has been declining in recent weeks and is expected to come under further pressure due partly to a Russian dispute with Turkey over agricultural trade and to the need for Russian farmers to offload their stock before the new crop hits the market in the summer.
The ministry did not say when purchases would start. Its stocks are supposed to be used for boosting domestic supply when harvests are poor and to support prices in years that yield large crops. Russia harvested a record grain crop in 2016 and prospects for this year have been bright so far. The new prices for maize (corn) and rye, according to the proposal, will remain at the level of the current programme, while prices for barley will be reduced. In the new programme, the ministry also proposed setting prices for first- and second-class wheat, which Russia almost does not produce, to stimulate the production of high quality wheat, it said.