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Grain prices have grown, and the oil – stabilized, but then the quotes will grow slowly
The farmers of the South of Russia to end the year with good financial results. You can not say about the grain traders: they are caught in a price vise and forced to work almost at a loss. Although in General the grain market looks stable, experts are confident that it shakes.
Your concerns about the agricultural market, three large dimension – General Director IKAR Dmitry Rylko, the General Director of "Agroseguro" Vitaliy Shamaev and Refinitiv analyst at the center for agrarian markets of the black sea region Olga Hornbeam expressed at the conference "water transport of Russia + GrainRu 2019", held in Rostov-on-don the company Viva Consult.
The source of current developments in the grain market Dmitry Rylko suggested to look at last year's events.
This year, we have average crop, but the difference with the previous year was very low carryover stocks, I would even say extremely low, – said Dmitry Rylko. We at the Institute operate in such a thing as a "technical reserve" is what you need processors to quietly move on to the next season. When carry-over stocks above the level of the technical reserves, grain prices early in the season remain low. When carryover stocks are close to technical, market starts to decline.
In early 2019, this fever was reflected in a rapid increase in wheat prices. Grain protein 12.5% of FOB Novorossiysk reached a price of up to $ 248 per tonne.
Of course, our farmers, being under impression of last year, I believe that now they offer an insultingly low prices ($ 207-208 / tonne). And, as always in such cases, hoarding grain, – said Dmitry Rylko. And to sit on the reserves they can for a long time: Economics of agriculture, especially in the South of the country, allows it to do.
Last week, according to the National Union of grain producers, in the SFD and NCFD grain prices were established on the following levels:
- wheat of 3rd class– 11 000 – 13 750 rubles per ton;
- wheat 4-th class– 10 650 – 13 750 rubles per ton;
- wheat of 5th class– 9 300 – 13 500 rubles per ton.
In October, the third and fourth grades equal in price. Rylko explained that "the phenomenal quality of wheat", which was collected in the South of the country.
– We weekly carry out monitoring and see that as of June no boats with quality below 12% none of the Russian terminal was not. Even for Egypt, where the requirement for protein is only 12%, shipped party with protein 12,5%, because it is simply impossible to find something worse, – explained the expert.
Domestic prices for wheat, experts have called quite high – especially given the fact that the external market did not have (at least until mid-October) to such strong quotes.
– Farmers expect a premium for high quality grain, has created a market shortage of supply. The situation is exacerbated by the fact that millers and processors who are hungry with past seasons, when we frantically took out the grain, it now began feverishly to buy up, – said Olga Grab.
At this point, the foreign market came out with its record harvest Ukraine, which, according to Rylko, could strongly improve the quality of the grain.
Ukraine, which exported polutora actively saturates the world market with grain protein of 12.5%. The Russian offer is constantly faced with the Ukrainian and Ukrainian, including due to cheaper logistics, often oppresses us, – explained the head of Icarus.
In General, as global competitors do not give up quotes on the foreign market and their own consumers, to lower domestic reduction between the prices on FOB terms (delivery to the port) and on the conditions of CPT (delivery to the buyer-importer), as in a vise, clamped the Russian grain traders.
– To sell grain abroad becomes unprofitable, – stated Olga Grab.
However, domestic demand was not the only factor that turned the vise.
Prices in the domestic market, experts believe, supported by "a factor of VTB". About the policy of the VTB group, the participants spoke at both sessions – and the one that was dedicated to logistics, and on the other, which discussed the export of grain. Because the emergence of the "big government monster", as one of the speakers concern.
One of the most interesting processes in the market of grain logistics is the action of VTB group, – told the Director of logistics of the company "Morstroytechnology" Alexander Goloviznin. They took over the debts of shares of United grain company, the brothers Magomedov and now own almost half the stock one is not enough. Through UGC they directly control nearly Novorossiyskiy Kombinat KHLEBOPRODUKTOV. The process of buying a 50% stake in a grain terminal Taman"". They bought grain train operator, they bought grain trader of "Myrogroup resources". That is practically a state company, which controls and logistics, and grain trade.
According to Goloviznin, to strengthen its positions on the grain market of VTB lacks only a full control over the shares of UGC. Now the other half of these shares owned by the state and controlled by the Ministry of agriculture of the Russian Federation.
– According to rumors and circumstantial evidence, that leak including in the Central press, it can be concluded that peace in the family there. So the Kostin appealed to the President with a request to privatize the United grain company and it is delivered in the privatization plan for next year. VTB claims on willingness to buy 25% stake – said Goloviznin. – This large government monster is unlikely to create very competitive conditions for the rest of the business.
And the "rest of business" in the face of the traders already know. According to General Director IKAR Dmitry Rylko, acquired by VTB trader "of Myrogroup resources" weekly has become a price leader in the grain market – that is, offered for wheat more than he could offer other companies.
Of course, the high price allowed the "Myrogroup" to buy much more grain than purchased by other traders. As a result, "Myrogroup", which last season were not even in the top five largest exporters in July-August of the current year became the leaders in shipments of grain from the black sea ports and maintains this status until now.
"Myrogroup resources" is the number one export from the Black sea and is number two in the export of grain from Russia in General. As of the end of October the proportion of "MHR" in the market was second after the "Reef," said Rylko.
On an extraordinary rise in shipments from the "Myrogroup" drew the attention of the newspaper "Vedomosti". With reference to members of agroholdings and grain terminals publication wrote that "Myrogroup" bought grain for the price of 5-7% above the market. CEO Andrey Doluda, however, denied the claim, stating that it is the rest of the exporters will publish in their price lists low prices. A sharp increase in shipments Doluda explained, "the tasks set by the shareholders to the company".
– It turns out, one player regularly buys grain at a sacrifice price and compensate for their losses due to the activities of the terminal, and the rest of the exporters are forced to adapt his pricing policy to enter into destructive pricing cycle, – said Rylko.
The Russian prices will form Argentina
Wheat prices in the short term, analysts predicted stability or slow growth. These outbreaks, in mid-October (when just a week of the quotation of Novorossiysk rose to $ 210-212 a tonne), it is not expected.
– The rise was due to the fact that the failures started in the markets from which we all waited for news, – said Dmitry Rylko.
Because of the lack of water damaged crops grain crops in Argentina and Australia, the harvest this year there is expected to be very low. And in the United States and Canada, by contrast, in mid-September went to the heavy rains that literally flooded fields strong red spring wheat.
As a result, about 10-12 million tonnes of wheat quality, or even disappeared from the market, or turned into fodder, – stated the head of IKAR.
However, the market, as the analysts say, "already reflected the news". In the first week of November quotes in deepwater ports then increased, then decreased, and by November 11, according Refinitiv Agriculture, established at an average of $ 207 per ton.
– World market projected moderate growth of prices, and traders hope it will, – said Olga Grab. – In December, our forecast – $ 208 per ton. Much recovery until. Before the New year, traders will little to buy grain, because nobody can say how much later that wheat will sell on the world market.
After the New year, the market may Wake up, and, according to the forecast Refinitiv, price on FOB Novorossiysk will reach $ 215 per ton. However, ICARUS such optimism is not shared.
The answer, unfortunately, lies in Argentina, where the situation is extremely specific, – said Dmitry Rylko. – To power in this country came the socialist President, who is nothing left to do but to raise export duties on goods. Now the duty on Argentine wheat is 5%, the government plans to raise it to 10% and further to 20%. Now the Argentine wheat costs $ 200 per ton, wheat in our region – $ 208. If the wheat in Argentina will rise to $ 205-206 / ton, the price will increase to $ 215 per ton. On the other hand, everyone expects the devaluation of the peso: a weakening of the currency is able to balance and even to cover the export duty.
With regard to internal prices, "in the foreseeable future," said Rylko, fall he sees. And it explains, first, the fact that the stocks of wheat in the southern Federal district and North Caucasus Federal district is the lowest in the last five years; and secondly, the fact that the South-Eastern regions ("from Orenburg region and beyond") adapted the export of grain in Kazakhstan. Officially not quite officially in a neighboring state can be sold nearly 2 million tonnes – a huge amount which will not create (and could!) additional load on the market of European Russia.
Corn will not lie?
The head of the analytical center "Agrospektr" Vitaliy Shamaev, showing price charts in different cultures, advised farmers are now taking profit on wheat market, and the implementation of sunflower and maize to defer until the second half of the season.
Although the production of sunflower this year, a record – more than 13 million tons, lower prices for culture due to the large harvest Shamayev did not expect.
– The ceiling of the market of oilseeds grows. I am sure that in Russia the production of oilseeds should be at the level of 30 million tons, and want to cancel the export duties on oilseeds, – said Shamayev. – However, oil and fat industry totally against it and even demands to increase taxes.
Soon the sunflower will inevitably go up. "Sovekon" reports that last week falling of the prices in the whole country stopped and "passed the bottom". In ICARUS, indicate that prices stable for two to three weeks, and if some mills continue to reduce the purchase price, not because of a large crop, but because they soon provided themselves with raw materials for processing.
The portal OilWorld November 8, reported an increase in purchasing prices for sunflower in southern Federal district on 800 rubles – up to 17.9 thousand rubles per ton.
Corn for grain, according to the National Union of grain producers, who in early November was trading in the SFD and NCFD 8 000 – 10 350 rubles per ton. During the week the culture fell by 175 roubles. Dmitry Rylko believes that corn will close down domestic demand in grains in favor of wheat exports.
We got very good corn crop, and exports it almost goes. Something will purchase the Turkey, although in this market we will seriously compete with Ukraine. A little will go to Iran, but there can be problems with paying. Only we could take out five million of corn, – said Dmitry Rylko. Over the last couple of weeks throughout the European part of Russia passed a feverish review of eating patterns in the direction of increasing the proportion of corn – because it stands on 2-2,5 thousand rubles cheaper than wheat. This revision of the formulas leads to the fact that approximately 2 million tons of corn is fed to animals in the domestic market compared with the usual diet. Other things being equal, we have released up to 2.5 million tonnes of wheat for export.
According to the agriculture Ministry, the harvest of corn after threshing, 80% of the area was 12.6 million tonnes. For export, as of 5 Nov sent to 834 thousand tons. So that the stock in the country is sufficient. And the new scheme of feeding livestock producers may have to use in the future. This autumn sowing of winter cereals was a record (according to the Ministry of agriculture – more than 18 million hectares), sprouts farmers assessed as good. If the wheat does not grow before winter, harvest and next year will be good.