Russian maize – market situation
In the recent years corn has become more demanded grain on the Russian market. Considering the high prices settled in the previous season, the high crop forecasts for 2013/14 season was the positive news. Meanwhile the situation changed due to the harvesting campaign preliminary results. In the stated material the Agency's experts to present the tendencies in the feed corn sector and to note factors forming them.
Passed season with «plus» sign
The current season continues to wonder the market operators with the price tendencies on the Russian grain market. But before to talk about the current season, let us remind you the previous one. Due to the unfavorable weather conditions the harvesting campaign started with the significant delay. Almost all the country regions faced excessive rains and the grain was too wet to be harvested. Thus the grain qualitative parameters worsened supporting the high prices during the season. Most buyers reported about the large number of grain offers with too high parameters of impurity and moisture content. As a result the processors demanding for grain purchase with the qualitative parameters up to standard GOST had to do that at the prices close to the maximum. At the same time the agricultural producers were not ready to offer grain at the low prices being afraid of crop decline, and also noting rather stable demand for it on the market. Thus in February in the European part of the country demand and supply CPT prices for corn were at the level of 9300-10600 RUR/t.
Note according to the data of APK-Inform Agency, in 2012/13 MY corn crop in the Russian Federation totaled 8.21 mln tonnes. But considering the low qualitative parameters of feed corn and the stable demand, the previous season passed with the «plus» sign and the prices were high.
Season start: quality means a lot
The beginning of 2013/14-season was different of the previous one. Meanwhile the harvesting campaign was to come; the grain prices faced a decrease. Besides a lot of the processing enterprises had already formed the major stocks of the grain which caused the demand decrease. Besides favorable forecast of the corn crop also impacted the prices decline. Thus according to the data of APK-Inform Agency the crop production in Russia in 2013/14 MY to total 9.5 mln tonnes.
But unfortunately the weather also corrected the plans of the market participants. Thus in the beginning of the harvesting campaign in August on the feed corn market there was sufficient prices decrease. The certain regions started harvesing corn so the offers number of grain increased. The average demand prices were at the level of 6000-7000 RUR/t CPT meanwhile qualitative parameters were up to state standard. But in September due to the excessive rains in the certain regions there was offered grain with exceeded of allowed level of impurity and moisture content. The corn demand prices range was varied depending on its qualitative parameters. Thus according to the data of APK-Inform Agency in September purchasing prices were at the level of 5000-6500 RUR/t including delivery, meanwhile low quality grain was offered by 3500-4000 RUR/t CPT. At the same time the enterprises need the high quality up to state standard grain stocks fulfillment reported about the insufficient number of grain offers on the market. In order to attract the necessary volumes the companies had to offer the maximum demand prices. By October 2013 the prices faced a bearish trend. However the number of offers of grain with high qualitative parameters did not increase.
What to expect further?
Note to date the corn prices are stable. The demand is moderate but at the same time a lot of processors forecast prices further decrease. But the main question is how long would it be? Of course the current situation is rather agreeable for buyers. At the same time the agrarians prefer to wait. Note one of the main factors is the grain qualitative parameters issue. The processors again have to announce the maximum prices in order to purchase grain with up to standard qualitative parameters.
In order to resume it is difficult to forecast of the situation further development. To date the market operators are divided by two groups: poultry plants needed the permanent supplies of high quality grain are ready to fix maximum prices for large-scale parties. At the same time the certain enterprises do not activate purchasing waiting the bearish trend.
At the same time the export-oriented companies do not face active interest purchasing the necessary volumes. Thus according to the data of APK-Inform Agency the corn demand prices are at the level of 5700-5900 RUR/t CPT.
According to the data of APK-Inform Agency in the current season Russia to supply on the foreign markets nearly 2.8 mln tonens of corn as opposed to 1.9 mln tonnes in 2012/13 MY. The supplies geography also changed. Thus in the previous season the Russian grain was purchased by Turkey, Italy, Azerbaijan, and in 213/14 MY there will also be Iran, Libya and others.
According to the data of APK-Inform Agency, in October-November there was supply prices decrease to 178-182 USD/tonne FOB as of the end November as opposed to 185-187 USD/tonne FOB in the previous month. The stated trend was based on the demand weaken on the side of the major importers.
Market operators expect further cheapening of the Russian corn due to the strong competition with the Ukrainian grain.
expert of the grain market department of APK-Inform Agency
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