Russian Agriculture Ministry considers price situation on grain market to be difficult, intends to ensure that international market prices do not become attractive for Russian grain exports, agriculture minister says

MOSCOW , December 13, 2012 () – The Russian Agriculture Ministry considers the price situation on the grain market to be difficult and it intends to ensure that international market prices do not become attractive for Russian grain exports.

"Grain prices inside the country continue to grow and overall the situation is within a difficult price range," Deputy Agriculture Minister Ilya Shestakov told the press in Moscow Thursday.

In the European part of the country, grade-3 and grade-4 wheat has surpassed the psychological threshold of 10,000 rubles per tonne. "Prices are steadily rising by 2% per week - it is not difficult to imagine that if this continues they could reach very serious figures," he said.

Intervention on the grain market will help to slightly reduce prices, the ministry reckons. The Agriculture Ministry has proposed that the government carry out large-scale intervention in February-March 2013. "Maybe the rise in prices can be lowered," he said.

Large-scale intervention has the risk of increasing grain exports, he added. So far exports are slowing down because of weather conditions. "But in absolute figures the indicators are high, and this also concerns us," the deputy minister said.

During intervention grain is sold to a certain category of consumers - (milling and feed companies), which to a certain extent "protects us against grain being exported."

In addition, the last U.S. Department of Agriculture forecast on global grain harvests indicated a drop in prices on the market. In this case, Russian grain would not be competitive due to high prices on the domestic market.

"In order for exports not to increase, we need to make sure prices do not become attractive for exporting abroad," he said.

The Agriculture Ministry reports that Russia exported 12.1 million tonnes of grain from July 1 2012. Grain exports could reach 15.5 million tonnes by July 1 2013.

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