Russia was hit by a drought last year that slashed its grain crop by one-quarter to 71 million tonnes and quickly depleted the exportable surplus. The official 2012/13 grain export forecast stands at 14.8 million tonnes, down from 27 million tonnes a season earlier.
The drought also sent domestic grain prices to record highs last year, but wheat prices have been falling since early February, helped by sales from government grain stocks. “We expect the downtrend to continue, taking into account continuing sales from the government stocks and generally not bad expectations for the new harvest and low prices for the new crop,” SovEcon agriculture analysts said in a note.
Russia’s Agriculture ministry has narrowed the range for its 2013 grain crop forecast to between 90 million and 92 million tonnes last week from between 90 million and 95 million tonnes.
Prices for the new crop milling wheat are currently quoted at $265-270 per tonne on a free-on-board (FOB) basis, SovEcon said. As to the current harvest, Russian prices for wheat with 12.5 percent protein content fell to $280 per tonne last week from $290 per tonne on a free-on-board (FOB) basis in the Azov Sea, according to the Institute for Agricultural Market Studies (IKAR).