Russia is to allocate 9.5bn roubles ($330m) to its long-delayed grain intervention programme - less than one quarter of the sum spent on last year's buy-in - despite lower prices this year.

Yelena Skrynnik, Russia's farm minister, told parliament that the programme, which is aimed at supporting prices, would "tentatively" start on November 2.  

Ms Skrynnik in June said that up to 20bn roubles would be available for the programme, which was initially pencilled in to begin at the end of August.

This budget was viewed by US officials at the time as sufficient to buy about 4m tonnes of high-quality milling wheat.

Lower prices

Russia's intervention programme last year contracted to buy 9.6m tonnes of grain for 46.1bn roubles ($1.5bn), according to Washington data. However, thanks to high world prices, not all the grain was delivered, leaving the programme with eventual purchases of 8m tonnes.

However, while some state farm budgets have taken a hit this year from cuts forced by the global economic crisis, some observers believe that a shortage of silo space, rather than dearth of funds, may be the primary reason behind Friday's cut.

"It's difficult to know, given the lack of information, but they appear to still have in storage an awful lot of the grain they bought last year," a London analyst told Agrimoney.com.

"The reason the budget is a low lower may have more to do with capacity."

Wheat prices are, at 2,450 roubles a tonne for feed grain according to Moscow-based analysis group SovEcon, more than 25% down year on year.

Milling wheat, by free on board in Rostov, is 7% cheaper at 4,636 roubles a tonne.