The rise in Russia's wheat prices since the lifting of the country's export ban may not - in practice - be as dramatic as has been made out, given merchants' strong bargaining power, a leading analyst has said.
The Russian Grain Union lobby group said that prices of fourth-grade milling wheat, the type used in exports, had soared by some 700 roubles ($25) to nearly 6,000 roubles ($215) a tonne since Vladimir Putin, the Russian prime minister, on Saturday unveiled the lifting of export curbs from July 1.
The rise could even be higher – at least, in terms of what farmers are asking for, Andrey Sizov, managing director of Moscow-based analysis group SovEcon, said, estimating the increase at 500-1,000 roubles per tonne.
"But that is an offer price. It is correct to say the offer price is going up, but that does not mean there is any trade going on at these levels," Mr Sizov told Agrimoney.com.
The Russian wheat market is being keenly watched abroad now that the country, a fierce price competitor, is returning to exports.
Iowa-based broker US Commodities said: "Russia currently has the cheapest wheat in the world. Russia's re-entry into the world grain markets will shift demand from the US in the coming months."
Strong hand
In fact, Russia's wheat market was likely to take a couple of weeks to adjust to the return to exports, as it did when the ban was announced last August, Mr Sizov said.
And prices then were likely to reflect merchants' bargaining power, after stocking up on grains since late April in expectation of a resumption in trade.
"They have enough stocks to export for now."
Indeed, it looked a buyer's market for now, with farmers needing to sell grains to raise funds for the rest of the spring sowings programme, and to finance the forthcoming harvest of winter crops.
"Merchants have strong negotiating power," Mr Sizov said.
'Grim yields'
The comments came as wheat prices continued to fall on international markets, pressed both by Russia's return to shipments and some rain in Europe, where dry weather has considerably reduced crop hopes.
Yields from the initial French winter barley harvest have come in at 3-4 tonnes per hectare, a result termed "grim" by one merchant, if not necessarily representative, so early, of the rest of the crop.
US meteorological service WxRisk.com said that weather models were indicating a "major rain event for France and Germany" next week.
"A major cold front moves into the northeast Atlantic on June 7 and as the front comes into France the UK and Germany this front brings in significant rains."
Australia & New Zealand Bank said: "In particular, this rainfall is timely for Germany, which is a later crop than in France, helping to limit yield declines at this stage."
Chicago wheat for July stood 1.1% lower at $7.74 a bushel as of 11:45 GMT, with Paris wheat for November down 1.4% at E234.50 a tonne.
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