|25 November, 2019

Russian wheat prices up with higher demand, dry weather

Rains and snow expected in Russia this week

MOSCOW- Russian wheat prices recorded a second consecutive weekly rise last week amid higher export demand and lower domestic supply caused by concerns about the 2020 crop in Russia and Ukraine, analysts said on Monday.

Farmers in Russia, the world's largest wheat exporter, have already sown winter grains for the 2020 crop on 104% of the originally planned area. 

Black Sea prices for Russian wheat with 12.5% protein content and December delivery were up $1 to $208 per tonne on a free on board (FOB) basis at the end of last week, agricultural consultancy IKAR said in a note.

SovEcon, another agricultural consultancy in Moscow, said wheat prices were up $1 to $209.5 per tonne. Barley rose $1 to $188 per tonne.

"There is a serious lack of moisture in both Russia and Ukraine, however sowings in the majority of regions receive enough precipitation for early development," SovEcon said.

In general, the condition of sowings in Russia was close to average but in some cases slightly worse than a year ago, it said, adding that rains and snow were expected to arrive in Russia and Ukraine this week.

Temperatures in the European part of Russia are lower than usual for this time of season but above the level that would threaten sowings.

Despite concerns, "farmers are not impressed with the current prices and still prefer to store wheat while some exporters start to run out of time" to source wheat for previously signed contracts, SovEcon said.

Russia exported 19.4 million tonnes of grain, including 17.0 million tonnes of wheat, between the start of the 2019/20 season on July 1 and Nov. 21, SovEcon said. Total grain exports were down 16% from a year ago.

Amid rising demand from processors, domestic prices for third-class wheat in European part of Russia rose 125 roubles to 11,350 roubles ($177.8) a tonne by the end of last week, SovEcon said. That price was on an ex-works basis, which excludes delivery costs.

In the Southern and Volga regions, there was a spike in demand from Azeri buyers, while in Siberia, third-class wheat rose by 300 roubles to 11,000 roubles per tonne amid strong demand from Kazakhstan, SovEcon said.

Sunflower seed prices rose by 250 roubles to 15,800 roubles a tonne, SovEcon said. Domestic prices for sunflower oil added 425 roubles to 42,175 roubles a tonne, while export prices climbed by $15 to $695 per tonne.

IKAR's price index for white sugar in southern Russia rose by $1.7 to $290 a tonne as of Nov. 22.

($1 = 63.8345 roubles)

(Reporting by Polina Devitt; Editing by Edmund Blair) ((Polina.Devitt@thomsonreuters.com; +7 495 775 12 42; Reuters Messaging: polina.devitt.reuters.com@reuters.net))

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