Банкеръ Weekly

Briefs

MILLING WHEAT PRICES WILL REMAIN ABOVE BGN230/TON

Deals in milling wheat from the new crop are quite a few in order to speak about the market price of that commodity, experts from the branch comment. There are differences also in the information about the price of wheat sold so far. Most producers say the price was BGN270-280/ton, while according to millers it was BGN240-260/ton. According to the Minister of Agriculture and Forestry Mehmed Dikme, only 5% of the yield has been sold so far. At that the deals concern mainly quantities negotiated in advance and even paid. No freely negotiated big deals have been effected yet. However, there are many forecasts, differing by BGN40-80/ton, depending on the various interests. Grain producers, for example, expect prices to remain at the level of BGN260-280/ton before VAT. This would partly compensate their losses, suffered due to unfavourable weather conditions and low yields per decare. That would mean an increase of flour prices to over BGN500/ton. Hence, all staple foods would be hiked. Bakers, on their part, hope for a decrease of milling wheat prices down to BGN200-210/ton, which would allow them to keep bread prices at the present levels and continue to market the same volumes. It is certain that quite a number of smaller bakers will face bankruptcy if milling wheat prices increase significantly. Last week some state officials, directly connected with the production and trade in grain, voiced their forecasts. The stance of the Deputy Agriculture Minister Boiko Boev hardly rests on any economic logics and is rather an attempt to present what is desired as real. According to him, the price at which wheat could be imported into Bulgaria is USD115/ton, FOB a Bulgarian port. If domestic prices are calculated on the basis of that import price, milling wheat should be sold at BGN200/ton at the most. A similar stance has been voiced by Vassil Tsokonov, an executive of the State Reserve, who claims that the grain intended for intervention on the market will be released at BGN190-210/ton. Unlike the state officials, most experts share the opinion that the price of milling wheat (which is USD150/ton on the international markets) in Bulgaria will be in the range of BGN240-260/ton, at that if the State's intervenes successfully on the domestic market. Some serious companies in the grain business have already agreed import of about 150,000 tons of wheat, but it will be offered in Bulgaria at BGN260-270/ton. It seems realistic for these prices to remain almosts unchanged in the sale of group 2B wheat, exchange brokers point out.

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