Moscow / Reuters — A Russian grain exporters’ group that accounts for about three-quarters of the country’s shipments said on Friday it had stopped buying for export until domestic prices cool down.
The move follows informal government measures to restrict exports as Moscow tackles a currency crisis, including through toughening of quality controls and a reduction of grain loadings by railway.
The clampdown on shipments by Russia, forecast to become the world’s fourth-largest wheat exporter this year after a bumper crop, helped Chicago wheat futures jump to a seven-month high of $6.77 a bushel on Thursday.
“Exporters state that the buying of grain for export has been stopped until the situation with domestic supply and prices stabilize,” the National Association of Exporters of Agricultural Products said in a statement.
“The association… understands and shares Russian government concern over the situation on the domestic market,” the group added. It asked other traders to join the initiative.
Russian domestic wheat prices have risen 30 per cent since the start of this marketing year on July 1, as one of the biggest ever crops and near halving in the value of the rouble this year led to record exports.
Officials are mindful that they need to keep food prices, especially staples like bread, stable as the economy heads into recession, with annual inflation expected to hit more than 10 per cent early next year.
Russia’s 2014/2015 grain exports were previously expected at around 30 million tonnes, or around 10 per cent of world trade, of which 20 million tonnes had already been exported since the start of the marketing year.
Domestic prices for third-class wheat rose 250 roubles per tonne in the first half of this week, but then the market stalled on news about the informal export curbs, said Andrey Sizov, managing director of SovEcon agriculture consultancy.
If the government manages to cool domestic prices, it would also be cheaper for the state to replenish its 1.5-million tonnes of grain stocks, to which it plans to add 3.5 million tonnes.
The state is ready to pay 10,100 roubles ($170) a tonne for third-class wheat in the European part of Russia, while the market price, on an ex-works basis, is at 11,425 roubles per tonne, SovEcon said.