MOSCOW, Russia (Reuters) — A Russian grain exporters’ group that accounts for about three-quarters of the country’s shipments said 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, which include tougher 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 Dec. 18.
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“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 percent 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 ruble 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 percent early next year.
Russia’s 2014-15 grain exports were previously expected at around 30 million tonnes, or around 10 percent 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 rubles 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 domestic prices cool it would also be cheaper for the state to replenish grain stocks, to which it plans to add 3.5 million tonnes.
The state is ready to pay 10,100 rubles ($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 rubles per tonne, SovEcon said.
