Rather stable prices are the main feature of the 2016/17 MY. High rye production and moderate demand were the key reasons for stable price trend. The article tells about the development of the market during the first half of the season.
Milling rye: price trends
The areas under rye are declining in Russia over the last years. The planted areas totaled 1.27 mln ha in 2016/17 MY (-1.1% from 2015/16 MY and -32% from 2014/15 MY). At the same time, growing yield that reached a record over the last 6 years at 2.04 t/ha let to produce 2.5 mln tonnes of rye, up 22% on year. Market operators estimated that the share of milling rye in total output increased and the quality of rye mainly met GOST standards.
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Rye production in Russia |
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2014/15 |
2015/16 |
2016/17 |
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Planted areas, `000 ha |
1875 |
1291 |
1277 |
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Yield, t/ha |
1.77 |
1.67 |
2.04 |
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Production, `000 tonnes |
3281 |
2087 |
2544 |
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Hereinafter source: APK-Inform Agency |
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Downward price trend was the main feature as of the beginning of the season. Bid prices for the grain declined by nearly 3000-3500 RUR/t since early July and reached 7200-7800 RUR/t СРТ by the end of April. In the Siberian Federal District the decline of purchasing prices was the most significant during early August and until early September, the prices reached 6000-7800 RUR/t СРТ (down 2500-2700 RUR/t).
By late September, the prices stabilized in most regions. Demand was moderate as buyers accumulated need rye volumes. Some market operators from the European part of Russia informed that the volumes of rye with low falling number, low natural weight and overstated rate of impurities offered at the market increased. Farmers kept high-quality rye waiting for higher prices.
Demand for rye increased in late October. Many processors needed to accumulate stocks. At the same time, supply was limited in the European part. Thus, rye prices started to grow and reached 9000-9500 RUR/t СРТ by the beginning of March. At the same time, the prices were rather stable in the Siberian District due to sufficient supply and moderate demand.
Rye flour: price trends
Russia can decrease rye flour production this season despite higher grain crop. The country produced 314.6 thsd tonnes of the flour during July-December of 2016/17 MY, down 11% year on year. Last season, rye flour production reached 638 thsd tonnes.
The prices for rye flour were mainly stable during 2016/17 MY. Price fluctuation was moderate and mainly seasonal.
Decline of the selling prices was the most significant in the beginning of the season. The prices were under pressure due to high supply of new crop rye at reasonable price. The prices for rye flour declined by nearly 2000-4000 RUR/t and reached 10500-14000 RUR/t EXW by late August in the European part of Russia. Trade activity was low during November-December. Mainly selling prices were stable while demand was moderate.
Since the second decade of January, flour prices started to grow in the Volga District due to higher prices for rye. The offer prices for flour increased by nearly 500-800 RUR/t to 11500-13500 RUR/t EXW by the end of January.
Price situation in the Ural and Siberian Districts differed a bit. Flour prices were rather stable during July-August while demand was low. Seasonal downward trend was observed during September, and the offer prices for flour declined by nearly 500-1500 RUR/t to 11000-13000 RUR/t EXW.
Stable price trend returned in early October, and the prices stayed unchanged until the end of December. High competition between flour producers and stable prices on milling rye market kept prices unchanged. Gradual price decrease was observed in the Ural District since February as millers needed to activate sales. The selling prices for flour declined by nearly 500 RUR/t and reached 11000-13000 RUR/t EXW.
Belarusian rye flour
Over the last several seasons, supply of Belarusian rye flour on the Russian market was one of price determining factors. This product is usually cheaper and causes higher competition rates. In January-October, Belarusian rye flour was offered at 9000-10000 RUR/t CPT.
Further expectations
Further development of Russian market of rye and rye flour is unclear. Market participant mainly expect higher prices for rye especially in the European part of the country where the supply of high-quality grain is not sufficient. At the same time, the price for rye flour will mainly depend on demand from buyers. However, grain processors in the Siberian District do not expect upward prices trend due to high supply of rye in the region.
Vera Sosna, Polina Kalayda, APK-Inform Agency
