Russia is headed for a bumper wheat harvest, but quality is disappointing, and farmers are still reluctant to sell, Black Earth Farming said.
The Russian farm operator sees the country's overall wheat production prospects this year at 66-68m tonnes, thanks to "increased winter wheat planted area, very low winter kill and plentiful moisture".
Overall grain production was seen at a record 108m tonnes.
But protein content is disappointing, even as the poor EU harvest increases export demand for milling-grade wheat.
"Wheat quality so far looks worse than average," Black Earth said.
And the progress of the harvest has been slow so far this year, with only 36% of the company's wheat harvested by August 10.
"The winter wheat yield to date of 4.9 tonnes per hectare is a very promising start but harvest is somewhat delayed and additional resources are being used to catch up."
"Exporters and domestic buyers are keen to purchase at current low levels but farmers are reluctant sellers due to a delayed harvest and low prices," Black Earth said.
Reluctant selling, and strong demand for milling wheat, are starting to increase domestic prices for high-grade product, Black earth said.
"Russian export wheat remains the cheapest quality wheat in the world," said Black Earth, noting a $20 a tonne discount to EU/Baltic prices.
"Quality issues in the EU are pushing the milling wheat premiums higher and the wheat price has started to show signs of increasing."
On Monday Russian agricultural consultancy IKAR reported Black Sea prices for Russian wheat with 12.5-percent protein at $166 a tonne on, up $2 from a week earlier.
SovEcon quoted FOB wheat prices in the Black Sea area at $167 a tonne, up $2.5 from a week earlier.
Black Earth Farming reported revenues of $34.0m over the January to June period, up 64% from the same time last year.
Then higher revenues were the result of increased sales volumes thanks to rapid selling of the previous harvest, as the weak rouble encouraged exports.
Sales volumes were up 80%, to 109,300 tonnes of grains.
Net profits rose 46% over the period, to $9.8m.
Black Earth shares, which are listed in Stockholm, were up 3.3% in afternoon deals, at SKr4.04.