Russian grain markets followed a negative trend last week with the sole exception for feed barley, which was generally stable and even strengthened in some regions, traders said. A bearish mood continued to dominate grain markets. The main factor pushing the prices down was an increase in grain stocks, which according to official statistics totalled 32.3 million tonnes as of January 1, or 16.3 percent up year-on-year. However, the decline may not continue for long as many market players believe, as in the current season, demand from domestic consumers and exporters may not be as low as last year.

From February 2004 to the end of last season wheat exports were low because of an export tariff, while barley exports declined substantially.

This coincided with a drastic decline in livestock and pig numbers and a slowdown in poultry sector development, which cut domestic demand for feed grain.

And this year's stocks are 6.2 million tonnes lower than 38.5 million tonnes at the start of 2003.

In the week to February 18, third class wheat declined by an average of 100-150 roubles per tonne, fourth class by 50 roubles, milling rye and feed wheat by 50-100 roubles.

Against that, feed barley prices were stable in most regions. But offer prices rose by an average of 100-200 roubles per tonne in the North Caucasus due to demand from exporters who have to honour urgent contracts.

Sunseed prices were stable, while sunoil prices kept declining due to record high output volumes.

Copyright Reuters, 2005