January 22 2003, 12:43 Vedomosti

Russia: grain interventions finished one week before the term

According to the announcement, posted on Federal Agency for Food Market Regulation's web-site, grain purchases to the state intervention fund are ceased, starting from January 23.

Completion of intervention purchases was earlier scheduled for January 31, 2003.

Officials at agriculture ministry are supposing that interventions have done their job - grain prices have grown by 10 percent on average over the two months.

According to analysts with a major grain trader - Unidell Group - Vladimir Petrichenko, intervention trades have been exhausted: agricultural producers and regional corporations now have other concerns than selling grain to the state. They are facing the problem of how at earliest to get money from the state for the grain, already sold, to start purchases of fuel and preparation of machinery to spring sowing campaign.

Director General of the Federal Agency for Food Market Regulation Vasily Krutin agrees that the interventions have been exhausted, but gives another reason. "Prices for grains in the market have now levelled up with those at which we buy wheat and rye. Grain producer can now easily sell the grain at a good price without any assistance of ours," he argues.

The government, which bought 2.8 million tonnes of grain, indeed has been able to somewhat lift the prices. According to Petrichenko, price for 3rd class milling wheat in European part of the country has reached 2,325 to 2,350 roubles per tonne, while at January intervention trades contracts for this wheat category of have been concluded at 2,299 roubles per tonne. In November - early December last year the sellers were ready to give up wheat of this class to the state at a price 150 to 200 roubles per tonne lower than the latter.

According to analysts, such growth can be explained by a well-elaborated scheme, employed by some major traders. "At the beginning of trades these companies intentionally lowered the prices to minimum, to win the right of selling a specific amount of grain to a specific elevator," explains Andrey Sizov, Head of Analytical Centre SovEcon. "Now, when most of regional sellers had drawn out from the trades, they upped the prices to the highest possible level, and for the second time sold the same grain they had declared in November. For the refusal to deliver to elevators the grain, they sold to the state for the first time, they lose the mortgage at the amount of just 30 roubles per tonne. But instead, while re-selling the grain now, at a maximal price, they are getting another 260 roubles per tonne," Sizov continues.

Petrichenko also says that traders have applied a "return" scheme, and therefore, it will not be possible to speak about actual amounts of grain, purchased be the state, until after two to three months, when the grain arrives at elevators.

US$1 = 32 roubles