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Russian wheat prices fall at start of harvest, hot weather a risk

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Russian export prices for wheat fell last week as the number of offers rose after the start of harvesting and offset risks posed by hot weather, analysts said on Monday.

 

Black Sea prices for the new Russian wheat crop with 12.5% protein content were $194 per tonne on a free on board (FOB) basis at the end of last week, down $1 from a week earlier, Russian agricultural consultancy IKAR said in a note.

 

SovEcon, another Moscow-based consultancy, quoted FOB new crop for July delivery unchanged at $196 per tonne. FOB barley prices fell by $1 to $167.5 per tonne, it added. The rouble currency rose by 2% against the US dollar last week.

 

"The market continues to monitor the weather in the Black Sea region closely," SovEcon said. "Hot and dry weather still threatens the new crop, the sowings are declining in some places, while low moisture reserves create chances for lower yields."

 

"Current weather conditions are expected to remain in the coming weeks," it added.

 

The Krasnodar region, one of the main producing and exporting regions in Russia’s south, has started winter wheat harvesting. It has threshed 125,000 tonnes so far with an average yield of 6.68 tonnes per hectare, up 0.52 tonnes year on year.

 

Hot weather also poses risks to the development of sugar beet in the country’s main sowing regions, Russia’s Sugar Producers’ Union said in a note. IKAR said its white sugar price index for southern Russia was $438.6 a tonne on June 21, up $39 from a week earlier.

 

Russia exported 41.8m tonnes of grain from the start of the current 2018/19 marketing season to June 20, down 18% from the previous season, according to SovEcon. That included 34.4m tonnes of wheat.

 

Domestic prices for third-class wheat of new crop were forming at around 10,600 roubles ($168) a tonne at the end of last week in Russia’s southern regions on an ex-works basis, according to SovEcon. Ex-works supply does not include delivery costs.

 

Russia’s spring grain sowing campaign is almost completed. By June 20, farmers had sown spring grains on 28.9m hectares, or on 97.9% of the originally planned area, compared with 29.5m hectares a year ago, the agriculture ministry said.

 

The ministry continued to sell grain from its stockpile last week, offloading 4,200 tonnes of wheat. It has sold 1.84m tonnes of grain, including 1.55m tonnes of wheat since the start of this marketing year.

 

Sunflower seed prices fell last week - for the first time since late May - by 50 roubles to 18,975 roubles a tonne, SovEcon said. The growth in the domestic sunflower oil prices continued: they added 75 roubles to 42,925 roubles a tonne. FOB export prices for sunflower oil rose $20 to $700 a tonne. ($1 = 62.9375 roubles).

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