19 Jul 2022 14:54

Grain purchases for Russian govt state intervention fund to begin in August - Agriculture Ministry

MOSCOW. July 19 (Interfax) - Grain purchases for the Russian government's intervention fund are to begin in August, the Agriculture Ministry said in a statement.

"The Agriculture Ministry will start building stocks of food wheat and rye next month. There are plans this year to purchase up to one million tonnes of grain as part of government interventions in the regions of Siberia, the Urals, and Central Russia," the ministry said in the statement.

According to the Agriculture Ministry, the fund's volume is to increase to three million tonnes in the coming years, with the grain being sold to Russian flourmills and bakeries, during so-called commodity interventions, if there is a sharp rise in prices in the future. Consequently, the market would be able to "cool down" and maintain stability, the Agriculture Ministry said.

As previously reported, the National Commodity Exchange (NCE), which is part of the Moscow Exchange group, on Monday began accrediting participants for exchange trading during government procurement interventions in the grain market.

Purchases for the intervention fund are conducted based on basic assets, such as third- and fourth-class soft wheat, and at least third-class rye. The Agriculture Ministry had earlier approved prices for purchasing and commodity interventions in the grain market.

The United Grain Company (UGC), the government's agent for managing the state grain fund, is holding tenders in order to select the custodians of the grain that the government will purchase.

The mechanism for commodity (when the government sells grain from the intervention fund) and procurement (when the government purchases grain) interventions has been operating in Russia since 2001, with the goal of stabilizing prices on the grain market and supporting agricultural producers. The government sells grain from the state fund when prices rise sharply, thereby halting price rises; and it removes excess grain from the market when prices fall sharply in order to halt price drops.

The government plans to start purchasing sugar for the state fund this year.