* Kazakhstan dominates imports ahead of duty suspension
* US soft red winter close to competitive without duty
* US, EU exporters likely to target northern Russia
By Polina Devitt
MOSCOW, Feb 15 (Reuters) - A fall in wheat prices in the United States and Europe to the lowest levels in seven months has improved the prospects of sales to Russia, traders and analysts said.
Russia, normally one of the world's top wheat exporters, has emerged as a potential market for its rivals this season after drought reduced the size of its harvest last summer.
Tight supplies have sent domestic prices to record highs, and the government has announced it will suspend a 5 percent grain import duty before the end of March.
"Basically, importing wheat from the U.S., France, Germany and Lithuania is potentially attractive," a Moscow-based trader said. "Now all will depend on whether the global market continues to fall, (and on) a continued rise in the Russian market and an exact date for the removal of the grain duty."
Russia is currently importing wheat from Kazakhstan, which does not have to pay the duty, but rising prices in the Black Sea region's top producer of hard wheat are likely to lead to imports from other countries soon.
Soft red winter wheat prices on the Chicago Board of Trade fell to a seven-month low this week as much needed rains improved U.S. crop prospects.
"If something is going to move other than Kazakh wheat, it will be soft red first. But depending on the shipping period and the supplies available in the EU, we could see some of that also," said Shawn McCambridge, an analyst with Jefferies Bache Commodities.
Front month CBOT soft red winter futures have fallen around 50 cents a bushel so far this month, which equates to almost $20 a tonne.
Some dealers said that after Russia removes the 5 percent duty, the price of feed wheat from Brazil and U.S. soft red winter would be close to a competitive level, particularly if global prices continue to fall.
By blending that feed wheat with higher-quality supplies, Russian importers could offer wheat that would be acceptable for human consumption.
U.S. soft red winter wheat is currently offered at about $304 per tonne on a free-on-board basis (FOB) for March shipment, while hard red winter wheat costs about $336.50 per tonne FOB and for March shipment.
In Russia, the average domestic EXW (ex-silo) price in the European part of the country for third-grade and fourth-grade milling wheat was seen at about $390 per tonne last week.
Imports are subject to a 10 percent value-added tax, while the cost of freight must also be added to the FOB price. Traders said some ports in northern Russia may be able to handle only smaller handysize vessels, adding to the cost of shipping grain.
Russia imported 47,000 tonnes of Kazakh wheat in January, according to official data, which included only supplies by rail, not by truck, said Andrei Sizov, the head of SovEcon agriculture analysts.
For the first week of February, official data shows Russia imported 35,000 tonnes, and imports could reach about 150,000 tonnes by the end of the month, according to Sizov.
The U.S. Department of Agriculture forecasts Russian wheat imports for the whole 2012/13 season at 1.5 million tonnes.
Talk circulated this week that a Russian buyer may have purchased about 100,000 tonnes of U.S. soft red winter wheat at $337 a tonne on a cost and freight free out (ciffo) basis, with shipment to Saint Petersburg. Ciffo prices include extra costs for unloading the ships.
The deal could not be confirmed, however, and some traders said that EU wheat could be more attractive for the Russian market.
"I would think Europe should be the most competitive (beyond Kazakhstan), and of course delivery is quicker," Wayne Bacon, president of grain trader Hammersmith Marketing, said.
"The Baltic states are pretty cleaned out; they've already sold their export surplus. Germany is more expensive than us. There is still some supply in France," a French trader added.
($1 = 30.0595 Russian roubles)
($1 = 0.7442 euros) (Reporting by Michael Hogan in Hamburg, Polina Devitt in Moscow, Karl Plume in Chicago, Sarah McFarlane in London and Gus Trompiz in Paris; Writing by Polina Devitt; editing by Nigel Hunt and Jane Baird)