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Russian wheat prices firm as USDA cuts crop forecasts

Russian wheat prices firm as USDA cuts crop forecasts

MOSCOW: Russian wheat export prices rose slightly last week after the US Department of Agriculture (USDA) unexpectedly cut its crop forecasts and domestic producers held back sales in expectation of higher prices down the line, analysts said on Monday.

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

Price growth was supported by the latest USDA report, IKAR said. The report said the ministry had cut its Russian wheat output forecast for 2019 by 4 million tonnes to 74.2 million tonnes. It also cut forecasts for Russian wheat exports in the 2019/20 season down to 34.5 million tonnes from 37 million tonnes.

SovEcon, another Moscow-based consultancy, quoted FOB wheat for July delivery as mostly flat last week, edging down $0.50 to $192.50 a tonne. FOB barley prices rose by $5 to $173, it added.

“On one hand, traders try to lower the price to compete with other (countries); on the other hand, the supply is getting lower as farmers want higher prices,” SovEcon analysts wrote.

“A stronger rouble also doesn’t help,” SovEcon added.

Russia also lost its second tender in a row for its wheat to be bought by Egypt’s General Authority for Supply Commodities (GASC). The Egyptian state grain buyer instead chose Ukrainian and Romanian wheat.

Over July 1-11 Russia exported 505,000 tonnes of grains, which is 53% less than the same period the previous year, SovEcon said, citing data from Russian customs authorities.

That figure includes 191,000 tonnes of wheat, 205,000 tonnes of barley and 109,000 tonnes of maize (corn), the consultancy said, adding that it expects July grain exports to be at 3.8 million tonnes, including 3 million tonnes of wheat.

However, SovEcon said it believes that export data is being heavily under-reported by Russia’s customs authorities.

On the domestic market, prices continued to fall on the arrival of the new crop. Prices for third-class wheat fell by 150 roubles to 10,675 roubles ($170.16) a tonne at the end of last week in European parts of Russia on an ex-works basis, SovEcon said. Ex-works supply does not include delivery costs.

Sunflower seed prices fell by 200 roubles to 19,750 roubles a tonne and domestic sunflower oil prices rose by 250 roubles to 43,825 roubles a tonne, SovEcon said. FOB export prices for sunflower oil rose $10 to $720 a tonne.

IKAR said its price index for white sugar from southern Russia was at $420.70 a tonne on July 12, down from $425.87 a week earlier.