Russia: Wheat prices continue to rise amid growing risks for next year’s harvest

Russia's wheat export prices continued to rise last week amid growing risks for next year's harvest as a smaller area is expected to be sown with winter grains than originally planned, Reuters reported on October 7.

Russia is expected to be the world's fifth-largest wheat exporter in 2013/14 after a recovery in its total wheat harvest to 50 million tonnes last season. Concerns over next year's harvest are rising, however, due to bad weather. Rains are expected to slash Russia's area for winter grains sowing this year and the winter wheat crop in 2014, signalling more risks for next year's global supply, analysts said earlier this week.

Its export prices for wheat with 12.5 percent protein content rose to $260 per tonne last week from $253 a week earlier in the Black Sea on a free-on-board (FOB) basis, the Institute for Agricultural Market Studies (IKAR) said in a note. Prices for wheat with the same protein content rose $7 to $235 per tonne in the Azov Sea, it added. Meanwhile, prices for wheat with 11.5 percent protein content rose $6 to $255-260 per tonne on an FOB basis in deepwater ports, according to SovEcon Agriculture analysts.

Russia is officially expected to export about 20 million tonnes of grains this 2013/14 marketing year, of which 9.1 million tonnes had already been exported between the start of the season on July 1 and the end of September. This figure included 7.5 million tonnes of wheat and 1.2 million tonnes of barley, IKAR said.

Alongside weather factors, Russian grain prices are supported by an expected government restocking campaign and a lack of high-quality wheat, making the country less competitive compared to other exporters via the Black Sea such as Ukraine. Due to these factors, IKAR expects October grain exports to be in a range of 2.5 million to 2.6 million tonnes, falling from 2.9 million tonnes in September.

The government's restocking programme is expected to start on Oct. 15 in Siberia after several delays. It aims to buy up to 6 million tonnes of grains for the 2013/14 marketing year, of which up to 3 million tonnes is to be bought by the end of December.

Domestic prices for sunflower seeds were up 25 roubles at 11,075 roubles ($340) per tonne last week, SovEcon said. IKAR said its price index was flat at 10,800 roubles. Export prices for sunflower oil were flat at $870-880 a tonne on an FOB basis in the Black Sea, SovEcon added, while IKAR quoted the export crude sunoil price up $15 at $870 a tonne.

As for sugar, the Krasnodar price index was flat at 22,500 roubles per tonne, IKAR said.

09 October, 2013