Russia increases prices for 2015 grain crop purchases

by World Grain Staff
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WASHINGTON, D.C., U.S. — The Russian Minister of Agriculture on Oct. 5 increased the level of prices for 2015 grain crop purchases to the State Intervention Fund and made wheat prices equal for all federal districts, the U.S. Department of Agriculture (USDA) and Foreign Agricultural Service (FAS) reported on Oct. 21.

The order issued by the Russian Ministry of Agriculture increased prices for 2015 grain crop purchases to the State Intervention Fund from levels determined on March 31. The order also equalized wheat prices of the same class for all federal districts, while previous prices were different for the European part of Russia and for Siberia and Ural.

The Intervention Fund price for wheat Class 3 was set at 10,900 rubles ($174.23) per tonne, the price for wheat Class 4 was set at 10,400 rubles ($166.24) per tonne, and the price for wheat Class 5 (feed quality) was set at 8,800 rubles ($140.73) for all federal districts of the Russian federation, the USDA said.

Intervention prices for food quality rye, fodder barley and corn were set at 7,400 rubles ($118.35), 7,500 rubles ($119.95) and 6,900 rubles ($110.33), respectively.

The original purpose of grain purchases to the fund was to support farmers when market prices decrease. However, in the fall of 2014, grain sales to the fund decreased because market prices were higher than intervention prices.

On Dec. 22, 2014, the Russian Ministry of Agriculture sharply increased prices for intervention purchases, and farmers started selling grain to the fund. From Dec. 22, 2014 through July 1 (the end of the 2014-15 grain marketing year), farmers sold to the fund almost 890,000 tonnes of grain, or 75% of all grain sold to the fund in the 2014-15 market year, the USDA said.

The target prices for grain purchases from the 2015 crop to the fund, which the ministry set in March, were only slightly below the Dec. 22, 2014 level. However, farmers still preferred to sell their new crop in the market, because the floating ruble has kept grain exports high and supported domestic grain market prices.

From Aug. 20, (start of procurement interventions) through Oct. 6, the last intervention, farmers only sold 32,670 tonnes of grain to the fund. Increased target prices may stimulate farmers to increase sales to the fund.

The Russian Minister of Agriculture reported that in the 2015-16 market year, the fund could purchase up to 2 million tonnes of grain. Given the increased prices, purchases to the fund are likely to be less than the projected 2 million tonnes. Industry analysts consider that the effect of increased intervention prices on filling the fund or on support of farmers will not be significant, the USDA said.

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