Russia’s domestic wheat prices decline due to export curbs

Moscow | Reuters — Russia’s domestic wheat prices have declined since the start of the year as the government has curbed exports with informal limits ahead of the introduction of an official export tax, analysts said on Friday.

Russia, expected to be the world’s fourth-largest wheat exporter this year, imposed tougher quality monitoring of grain exports in December in a bid to cool domestic grain prices and curb food inflation as it tackles a financial crisis linked to plunging oil prices and Western sanctions.

The price for third-class wheat in the European part of the country fell 400 roubles to 10,825 roubles (C$199) per tonne on ex-works basis at the end of this week compared with late 2014, while prices for fourth-class wheat were up 375 roubles to 10,425 roubles a tonne, SovEcon said in a note.

Wheat is the only grain with falling prices now in Russia, SovEcon said, adding informal export curbs remained in place.

“Exporters are still running into situations in which they are not getting phytosanitary (quality) certificates without any clear explanation and not being allowed to sell abroad,” it said.

This applies to wheat in particular and is expanded to maize (corn) and barley from time to time, SovEcon added.

The export tax will amount to 15 per cent of the customs price plus 7.50 euros and will be no less than 35 euros (C$48) per tonne and run from Feb. 1 and until June 30.

Russia’s grain exports are likely to fall to 1.5 million tonnes, including one million tonnes of wheat, in January from about three million in December, according to its estimate. Monthly grain exports in the coming months are seen at one million tonnes.

The decline in domestic prices is likely to revive sales to state stocks in the coming weeks, SovEcon said. So far, the government has not been able to replenish its stocks significantly as its prices are lower than the market price.

This week it bought 12,800 tonnes of grain, bringing total purchases to 313,200 tonnes so far this 2014-15 marketing year.

It aims to buy 3.5 million tonnes of grain for the stocks, which were at a level of 1.5 million tonnes in mid-December, and offers up to 10,100 roubles for a tonne of the third-class wheat in the European part of Russia.

In the domestic sunflower seed market, SovEcon said prices rose 75 roubles to 19,750 roubles per tonne, while prices for crude sunflower oil were flat at US$800-805 per tonne on a free-on-board basis in the Black Sea.

— Reporting for Reuters by Polina Devitt in Moscow.

Comments

explore

Stories from our other publications