Opinion

March 1, 10:53 Source: APK-Inform Views: 3757

Feed barley market in Russia – looking of stability

 

2013/14 MY already passed its equator, which means that it is time to sum up the intermediate results of the season. The present article will remind how the marketing year started, and give the objective forecasts about development of the reporting market in the future.

Season-2012/13: wheat the quality matters

From year to year the Russian market of feed barley developed under different scenarios, without certain regulations. We would like to briefly remind the market trends of the last season. In 2012/13 MY weather conditions provided the main influence on the market of barley. Due to the long rains the harvesting campaign was significantly delayed. And many grain consumers reported on a large number of barley offers with inflated indices of inclusions or humidity. As a result, buyers the requiring high-quality barley were forced to purchase the grain at the maximum purchasing prices. It should be noted that the strong demand for the grain from export-oriented companies provided its important influence on formation of the price trends on the Russian market of barley, the reporting companies formed the maximum bid prices.

According to APK-Inform Agency, despite the relatively good indicator of barley production in 2012/13 MY, and the public purchasing interventions by which the market participants managed to form barley stocks at the prices below the market ones, the marketing year mainly faced the bullish trends.

 

Barley production in Russia

 

2012/13 MY

2013/14 MY

Planted areas, `000 ha

8819,6

9014,6

Harvested areas, `000 ha

7665,8

7998,5

Yield, c/ha

18,2

19,2

Production, `000 tonnes

13951,7

15357,1

New 2013/14 MY: new scenario

Since beginning of the new season the market situation significantly changed. After the start of the harvesting works the barley prices began rapidly declining, which only pleased grain consumers. According to APK-Inform data, in July 2013 the bid prices for new crop feed barley varied within the range of 5200-6400 RUR/t CPT (Southern, Central Black Earth and Volga regions). In turn, the old crop grain came on the market at the prices of 7800-8700 RUR/t, taking into account the cost of delivery. It should be noted that the bearish trend in the European part of the country developed until mid-August 2013. So, the purchasing prices for feed barley started from the level of 5000-6000 RUR/t CPT depending on the quality indicators and the purchased volumes. At the same time, grain consumers of the Urals and Western Siberia regions also reduced their purchasing prices. So, in August 2013 the bid prices for barley in the Urals region were declared within the range of 5300-6300 RUR/t CPT, in the Western Siberia region the prices were declared within 6100-7000 RUR/t CPT.

However, by the beginning of September 2013 the purchasing prices for barley in the European part of the country stabilized. A number of factors contributed the trend development. First of all, many grain consumers who already formed the required grain supplies, did not show an active interest in new purchasing operations. Secondly, buyers did not hurry to buy large-scale batches of barley due to the fact that the number of offers from agrarians remained quite sufficient. At the same time, in the Urals and Western Siberia regions the prices continued declining. The bid prices in the Urals region varied within 4700-5500 RUR/t CPT. In turn, in the Western Siberia region the purchasing prices totaled 4000-4800 RUR/t CPT.

But the price stabilization did not last for a long time, by the end of November 2013 in the European part of the country the purchasing prices began gradually rising due to the reduced number of offers from agricultural producers. Livestock enterprises, which required purchasing of large-scale barley volumes, fixed the higher bid prices. Grain processors experienced the need to purchase barley with high-quality indicators, and showed their considerable interest in the purchasing operations. Thus, the bid prices were declared within 5600-6700 RUR/t CPT (Southern, Central Black Earth and Volga regions). In the Urals and Western Siberia regions the prices varied within 4200-5500 RUR/t, taking into account the cost of delivery.

At the present stage, the situation on the market of feed barley is quite stable. Most grain consumers already formed the required barley stocks to work in the near future, and do not show interest in new purchasing operations. Many of them fixed the previous bid prices for barley. However, it should be noted that individual buyers which need to attract additional grain volumes, often informed that they were ready to pay the maximum purchasing prices for large-scale batches of barley.

andwhatis in the final?

Despite the current price stability, in the current period all market participants are worried about the burning issues, what happens next? We see two ways of the further development. A number of market participants expect for lowering of the supply / demand prices for barley. Taking into account the low demand for barley at the present stage and already formed stocks of the grain by many market participants, there are all prerequisites for development of the reporting version. In turn, a number of market operators forecasted the bullish trend. Buyers consider a limited number of barley offers with high-quality indicators as the main reason for the reporting version.

 

PolinaKalaida,

expert of the Russian market of grains and by-products of APK-Inform Agency

 

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