Prime Minister Dmitry Medvedev announced this yesterday at a meeting on the grain market situation and preparations for spring sowing. The range of grains put up for auction will also be expanded, the prime minister announced: auctions will also be held for 5th-class wheat, feed barley and rye. For now, interventions apply only to 3rd and 4th-class wheat.

The starting price for food wheat was set by a government decree at 7,600 rubles (class 3) and 7,200 rubles (class 4), for class 5, feed barley and rye another decree must be adopted, explains Vladimir Petrichenko, CEO of Prozerno. Market prices for grain are at absolute maximums this year. In the central part of Russia, according to Prozerno, as of yesterday a ton of class 3 wheat cost 11,550 rubles, in the south - 11,700 rubles.

Commodity grain interventions began on October 23 in the Siberian, Ural and Far Eastern Federal Districts. On November 6, enterprises from all districts were admitted to trading, and the trading volume was increased to 130,000 tons from 110,000 tons of grain per week. As of January 30, according to Medvedev, more than 1.5 million tons of grain for 13 billion rubles were sold. The interventions made it possible to slow the rate of growth of grain prices on the domestic market of Russia to 1-1.5% per week, the prime minister announced yesterday.

Allowing enterprises from all over Russia to participate in Siberian interventions has practically deprived the trades of any meaning; the sales have only led to a slowdown in the rate of price growth, but not to a fall, says Petrychenko. A paradoxical situation has arisen: for Siberians, for example, prices have risen due to increased competition among those wishing to buy grain, while in Central Russia, taking into account delivery from Siberia and the Urals, the cost of grain has exceeded the market price, he explains.

Now they have decided to correct the situation. "If there are no objections, we would technologically propose to sell the grain stored in the relevant federal districts during exchange trades primarily to organizations in these and nearby districts, which will reduce transport and logistics costs and make the price, accordingly, more acceptable for consumers," suggested Minister of Agriculture Nikolai Fyodorov.

Interventions may have some restraining effect on prices, says SovEcon executive director Andrey Sizov, although the scenario for their implementation is still not entirely clear. In addition, prices will be affected by other factors: world prices, volumes of grain imports to Russia and the approach of the new harvest, adds Sizov. According to Petrychenko, active sales of grain from the state fund will be able to stabilize prices.

At the end of January, Deputy Minister of Agriculture Dmitry Yuryev stated that by July the Ministry of Agriculture plans to sell almost the entire volume of grain from the state fund – the volume of exchange transactions will amount to about 3 million tons.

At the beginning of 2013, the state fund stored 3.8 million tons of grain, including 2.3 million tons of class 3 wheat and 956,400 tons of class 4 wheat, but some of the wheat from this volume has already been sold.

Interventions are released from Siberia