March 24 2004, 15:25

Russia: preliminary results of grain interventions

On March 22 the administration of Moscow Inter-Bank Currency Exchange announced the preliminary results of grain interventions on the domestic market of Russia. At present this project seems to be rather successful, but lack of state reserve grain stocks makes the positive effect of the grain interventions very short term.

Public tenders began on March 18 2004 and should continue to May 1. It was sold 736,000 tonnes of grain for 15 days, i.e. a half of the whole state reserve wheat stocks.

According to the Head of Moscow Exchange Serhey Naumov, it's difficult to appreciate the selling efficacy now; however, prices for intervention grain is 1.5 times lower than on the free market. At the beginning of intervention measures 3 class wheat cost on free market 6,660 RUR/mt, but by March 1 it cost about 4,400-4,700 RUR/mt on the exchange tenders (depend on the region), the experts said. At the same time free market prices for grain decreased by 110 rubles to 6,550 RUR/mt.

Meanwhile, insignificant amount of contracts on the free market shows that the owners of large grain stocks are waiting for the end of intervention sales to increase grain prices again.

According to the experts, intervention grain stocks will be enough only for 3-4 weeks tenders, so traders are ready to increase prices in April. The State will be able to control prices on domestic market only having grain reserve at 4-5 million tonnes level, Ihor Pavensky said.