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IKAR in Mass Media

Russia Said to Study Letting Grain-Export Ban Expire in July

27 мая 2011 года

May 24 (Bloomberg) -- Russia's government is considering letting a ban on grain exports expire as scheduled July 1 because of forecasts for a surging harvest, according to two people with direct knowledge of the discussions.

The ban started in August after Russia's worst drought in a half century ruined crops. It was extended in October and First Deputy Prime Minister Viktor Zubkov said March 2 it might last through the end of 2011. No formal decision was taken at the recent talks, according to the people, who declined to be identified because the information isn't public. Agriculture Ministry spokesman Oleg Aksyonov declined to comment.

The absence of sales from Russia, once the world's second-biggest wheat exporter, helped to drive global grain prices up as dry weather or floods curbed harvests from Europe to Canada. Resumed exports would help ease concerns about supply as European farmers contend with the driest growing conditions in more than three decades, drought threatens crops in China and flooding and heat harm plants in the U.S.

Russia may harvest as much as 90 million metric tons of grain this year, according to OOO ProZerno, a Moscow-based researcher. The national crop fell 37 percent to 60.9 million tons last year, government figures show.

Agriculture Minister Yelena Skrynnik said April 28 the government would discuss the ban after spring sowing.

Buying Speeds Up

Grain traders are preparing for a restart of exports, and wheat purchases for storage began accelerating about a month ago, according to SovEcon, an agricultural researcher. Grain reserves of 14 million tons, half of them held in a state-run fund, are big enough to make lifting the ban possible, SovEcon Managing Director Andrey Sizov Jr. said May 20.

The state will probably allow the ban to expire July 1, Interfax reported yesterday, citing an unidentified government official.

"Term of the governmental order ends in July, and we consider it is not expedient to extend it," Dmitry Rylko, director of the Institute for Agricultural Market Studies in Moscow, said by phone today. "Market liquidity must be restored. Grain surplus, accumulated and upcoming with a new crop in the South, should be exported. Otherwise, wheat production will become unprofitable, and we may have serious problems with winter sowing countrywide. In the end, like a boomerang, it will affect domestic consumers."

3.5 Million Tons

Russia's Grain Producers' Union estimates the grain surplus in the Southern Federal District, the country's traditional breadbasket and the region that most needs to export, at 3.5 million tons, Pavel Skurikhin, the group's president, told Bloomberg in an e-mail.

"What is most important, opening of exports will again become the factor that will assist grain production growth and will have a positive effect on Russia's authority as a world agricultural supplier," he said.

Russia's Grain Union, the largest lobby group for cereal exporters, estimates the surplus in the Southern and North Caucasus federal districts at between 8 million and 9 million tons, said Arkady Zlochevsky, the group's president. National carryover stocks may exceed 20 million tons as a result, he said.

Total grain resources may reach 105 million tons this year, considering potential carryover stocks and the outlook for an 85 million-ton harvest, according to Zlochevsky. That means prospects are for at least 20 million tons of exports in the next marketing season, he said by phone.

Export Estimates

Vladimir Petrichenko, ProZerno's director, said exports may be at least 17 million tons and might reach 20 million tons in the 2011-12 season. Rylko's institute, known as Ikar, estimated at least 10 million tons of potential shipments.

Exporters are preparing to restart deliveries, according to Zlochevsky. "No grain is carried to ports' silos yet, but traders deliver old crop's grain to silos in the ports' vicinity," he said. "Grain purchases are done in a more active way in the last month. Good chances for opening grain exports from July 1 have appeared now."

Favorable weather aided winter crops and higher temperatures in May's second 10 days helped to overcome delays to spring sowing, Russia's national weather center said today. Rains in the country's south early this month and some frost in northern regions in the 10-day period failed to damage crops, said Anna Strashnaya, head of agro-meteorological forecasts at the Federal Hydrometeorological Center.

"Everything is normal," she said by phone. "Crops' condition is close to annual average norm. Weather assisted to speed up sowing in the Volga region, and sowing is carried out ahead of schedule in Siberia in the period from May 11 to May 20."

ProZerno's Petrichenko increased his grain-harvest forecast to between 89.7 million and 90 million tons from May's estimate of 89.7 million tons, citing favorable weather, and said he will update the projection again early next week.

Source: Bloomberg  |  #grain   |  Comments: 0   Views: 85

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