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IKAR in Mass Media

WRAPUP 3-Russia grain imports to soar in 2010/11-analyst

10 сентября 2010 года

MOSCOW, Aug 19 (Reuters) - Russia, the world's third biggest wheat exporter last year, will have to import millions of tonnes of grain for the first time in more than 10 years after its worst drought in over a century, analysts said on Thursday.

Analysts estimate Russia may have to ship in 1.5-2.2 million tonnes, but a report in Vedomosti daily said Russia could import at least 5 million tonnes of grain this year.

Russia's Agriculture Ministry quickly denied that it was planning to import up to 5 million tonnes of grain in the 2010/11 crop year.

"Nothing of the kind is being discussed here," a ministry spokeswoman said. Despite the denial, European and U.S. wheat prices jumped , lifted by Russian import prospects that come hard on the heels of a ban on exports for the rest of this year, aimed at conserving stocks and heading off inflation.

Imports of 5 million tonnes would put Russia almost on a par with Egypt, the world's biggest wheat importer, as it competes in international markets, keeping up the pressure on U.S. grain prices which earlier in August soared to 2-year highs.

An economist with the United Nations' Food and Agriculture Organisation told Reuters the agency was likely to cut its outlook for 2010's world wheat output and stocks because of production shortfalls in Russia.

"Everyone is nervous about what if Russia imports, this is the crunch of the matter now, " FAO's economist and grain analyst Abdolreza Abbassian said.

"The question now is how much Russia can take from the market. It's not something that the market has a stomach for at the moment, that's why there is such nervousness."

Russia's deadly heatwave, which had sparked wildfires and blanketed Moscow in smog for two weeks, was declared over on Wednesday but is estimated to have destroyed a quarter of Russia's grain crop and could shave $14 billion off this year's gross domestic product.

Forecasters said rains were expected on Aug.19-21 in most of the country, bringing relief to drought hit regions, which will boost winter crop planting conditions.

GRAIN ROBBERY

The former Soviet Union, which included today's top Black Sea grain growers and exporters Russia, Ukraine and Kazakhstan, used to be the world's largest grain buyer importing dozens of millions of tonnes of grain every year.

In 1972, Moscow staged a "great grain robbery", emptying the U.S. grain larder by purchasing heavily from all the major grain exporters simulaneously.

Imports stood at 34 million tonnes in calendar 1990, the year before the Soviet Union collapsed.

Imports since then declined sharply to less than a million tonnes in the last few years, but the country has never stopped being an importer, either buying grain, or receiving it as humanitarian aid after disastrous crop years like 1998, when the country harvested just 48 million tonnes.

A shift from net exports to imports could be a blow to pride in a resource-rich country which had set out to build up its grain exporting infrastructure and whose leaders have stressed the nation can thrive without outside aid.

"Back to the USSR," Vedomosti's front-page headline said, a reference to Soviet-era imports of millions of tonnes.

President Dmitry Medvedev told the government on Thursday to keep a watchful eye on prices.

"We must examine cases of price increases, determine where there are objective reasons and where it is speculation, and we must fight this," Medvedev said during a visit to the breadbasket Stavropol region, Itar-Tass reported.

FALLING HARVEST

Russia's total grain crop is officially expected to reach 60-65 million tonnes, although some see it struggling to get above 60 million tonnes this year, way down from last year's 97 million tonne crop and the 108 million tonne harvest in 2008.

Dmitry Rylko, director of the Institute for Agricultural Market Studies (IKAR) told Reuters his organisation currently estimated domestic seasonal grain imports of at least 2.2 million tonnes.

He expected most of the imports to come from Kazakhstan and Ukraine, which is also considering curbing exports after its grain crops were hit by severe frosts and a scorching summer.

Kazakhstan said on Thursday Russia will be among its main export markets with 2 million tonnes of grain exports earmarked for Russia, Iran and other countries out of total 8 million tonne grain exports expected in the current marketing year.

Initial Russian demand is coming mainly from southern Siberia, the Volga region and the southern Ural mountains, regions relatively close to the Kazakh border, traders said.

"Kazakh wheat is of good quality and can be blended with Russian wheat to make excellent flour," a trader said.

As of July 1 Russian grain stocks were estimated at between 21.6 million tonnes and 24 million.

Annual consumption in the 2010/11 crop year is officially estimated at 78 million tonnes. Grain analysts expect consumption to be between 71-75 million tonned depending on the volume of animal slaughtering.

Source: Reuters  |  #grain   |  Comments: 0   Views: 40

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