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IKAR in Mass Media

In terms of state owned Intervention fund grain purchases, the government and all grain market approach the new acute problems, and solutions are necessary to be found immediately

26 января 2009 года

Moscow. January, 20. INTERFAX – In terms of state owned Intervention fund grain purchases, the government and all grain market approach the new acute problems, and solutions are necessary to be found immediately, experts of the grain market consider.

"No doubt, interventions have played the positive role: thanks to the additional liquidity given by the government, it was possible to stop the free fall of domestic market grain prices. Moreover, Russian interventions became one of the factors of recent strengthening prices on the world market, at least in case of ordinary food wheat. However in the process of growing accumulation of intervention purchases in the grain market new problems and risks accrue.

We are basing on the fact, that at a present export and intervention parity prices export operations again became more attractive. Adjusted for real grain purchase rates into intervention fund its volume can make no more than 6-8 mmt by the end of the season, not 20 mmt, as government’s initial target.

But even such provision can lead to the troubles, because there are serious concerns that a lot of key elevators, located in grain producing regions, very soon will be full of intervention grain", - Dmitry Rylko, the General Director of Institute for Agricultural Market Studies (IKAR) declared to "Interfax".

According to his words, the problem is that these elevators should be empty and ready to receive new crop by the summer this year, which will be harvested in southern regions from the end of June. The most acute problem may be in the Southern and Central Black Soil regions of Russia. "At the present condition of market infrastructure rather low rates of grain interventions ingress will be replaced by the same low rates of its shipment. With our complicated transport system, today's demand and other problems it is necessary to prepare to free space of the key elevators in grain producing regions for new harvest grain already now", - head of IKAR considers.

He adds that this process can become complicated if on-farm stored grain appears on the market. "It is necessary to estimate all the risks of a possible new price collapse and big losses of new crop grain, as intervention grain will complicate its entrance into elevators", - he has declared.

According to IKAR, the storage capacity of Russian elevators total 85-90 million tones. "But it is necessary to take into account that a considerable part of them are the capacities of flour and feed mills, which can store for intervention purposes in the very limited volumes", - D.Rylko has noted. Besides, the considerable share of capacities is convenient flat grain storage that does not meet the requirements of intervention grain storage.

An open question is where and on which terms to release the intervention grain. There are two basic variants, Rylko tells. – Firstly, deliveries of intervention grain for export under interstate or pure commercial agreements. Secondly, its deliveries to end users inside Russia. “The government could consider the following variant: grain delivery to domestic mills and integrated compound feed mills on terms of commodity credit. In any case these issues should be addressed rather immediately”.

Source: Interfax  |  #grain   |  Comments: 0   Views: 45

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