Russia has no plans to halt wheat exports but wants exporters to ensure prices paid to farmers are high enough to cover average production costs, two sources familiar with the matter, told Reuters on Friday.
This would mean keeping export prices for wheat at or above $275 to $280 per tonne, they added.
Russian Vedomosti business daily reported earlier on Friday, citing two unidentified sources, that Russia could recommend a temporary halt in wheat and sunflower exports after a sharp drop in global prices in recent weeks.
- Promotional Ads -
There is no such plan, the sources said.
However, since recent falls in wheat prices in Chicago and Paris, the Russian government became concerned about local farmers getting enough money for their wheat to cover costs and recommended exporters avoid prices below those close to the current ones, one of the sources said.
The second source said that Russia recommended its exporters set a wheat export price of not lower than $275 per tonne “until further notice”. Those who do not obey might face problems with obtaining phyto certificates needed for export supply, he added.
Russia’s agriculture and economy ministries declined to comment.
Prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports, fell $13 to $277 a tonne last week, according to the IKAR agriculture consultancy.
Wheat prices in Chicago Wv1 rose on Friday, breaking a four-session fall and moving away from a 20-month low hit on Wednesday. The market was supported by Vedomosti’s report.
“In the physical grain market, much more serious factors matter – food security, consumption per capita, logistical and infrastructure constraints, and of course the cost of production,” the Russian Union of Grain Exporters said on social media on Friday.
“There is no need for discussion here. Obviously, no one will sell below production cost, which in terms of FOB is about current’s price level,” it added.
Source: Reuters (Reporting by Polina Devitt; additional reporting by Darya Korsunskaya; editing by Jonathan Oatis)