Russian Interventions Underway

WASHINGTON - Oct 8/06 - SNS -- Grain procurement interventions in Russia got underway October 6, reports the U.S. agricultural attache for the country.

Authorized commodity exchanges will begin registering producers and auction participants October 2. Price levels for procurement of food quality wheat (classes three and four) were authorized by Order ##035;262 of the Minister of Agriculture.

The Ministry of Agriculture's Order authorized three sites for auctions: the central site will be in Moscow at the ZAO "National Commodity Exchange;" the second will be in Ekaterinburg - at the ZAO "Ural Regional Currency Exchange;" and the third will be in Novosibirsk - at the ZAO "Siberian Inter-bank Currency Exchange."

The Federal Agency on Regulation of Food Markets in the Ministry of Agriculture will serve as the procurement agent. Regulations require the sellers to have official status as agricultural producers and accreditation at the exchanges.

Procurement begins once the market prices are at or below the following levels: for European Russia class-three wheat - 3,100 rubles per metric ton (MT) or approximately $116.10 MT, and class-four wheat - 2,450 rubles MT ($91.80 MT).

For Ural and Siberia, class-three wheat prices are set at 3,300 rubles MT ($123.60 MT), and class-four wheat prices are set at 2,600 rubles MT ($97.40 MT).

At present in European Russia, the average elevator price of class-three wheat ranges from 3,800 to 4,100 rubles MT, and class-four wheat at 3,200 to 3,800 rubles MT. Large-scale proactive sales to the government are not expected.

In Siberia and Ural, the price situation is unclear because of delays in the harvest, along with potential of strong competition from Kazakhstan. Estimates of the elevator grain prices in these regions are approximately 3,200 to 3,600 rubles MT for class-three wheat, and 2,800 to 3,100 rubles MT for class-four wheat. At these prices, government procurement will have limited impact on domestic grain markets.