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IKAR in Mass Media

Russian wheat offered in port, export outlook up

17 июня 2011 года

GELENDZHIK, Russia, June 8 (Reuters) - The Russian grain industry expects to make strong return to the export market in the coming crop season, with sentiment lifted by the prospects for a large harvest and sizeable stocks from earlier years.

While forecasts vary, several experts at the Russian Grain Union's XII International Grain Round said they expected wheat exports of 10 million tonnes, and that resistance from disgruntled North African and Middle Eastern clients who lost deliveries to last year's grain export ban will be limited.

"I don't think it will be difficult to return to the export market," Dmitry Grant, a stategic advisor at state-owned United Grain Company (UGC) said.

"The world understands very well what happened in Russia, and the export ban was a way to protect the internal market."

Russian wheat is already being offered at $295 per tonne free on board (FOB) in international tenders. Benchmark November milling wheat on the Euronext exchange was up 8.25 euros at 233.75 euros ($342.4) a tonne on Wednesday.

Once the world's third largest wheat exporter, Russia saw 2010's catastrophic drought slash its crop by a third, prompting the government, fearful of shortages, to ban deliveries of grain to foreign markets from August last year. Prime Minister Vladimir Putin last month said the ban would expire on July 1.

Concerns over inflation could cause the the government to limit exports, but Russian traders are already competing in international tenders.

The Kremlin is under pressure to control inflation ahead of the 2012 presidential election, and the central bank said last week that ending the ban will add to inflationary pressures.

Prices surged immediately after Putin's announcement, with fourth-grade wheat prices in the North Caucasus rising by 700 roubles, or 13 percent, to 5,982 roubles ($214) per tonne in the first two days of trade.

BLACK SEA CONTRACTS

Prices for Russian wheat in the Black Sea port of Novorossiisk were pegged at $295 per tonne as exporters prepared to resume shipments next month, Dmitry Rylko, general director of the Institute for Agricultural Market studies (IKAR) said on Wednesday.

"This figure was discussed in a number of contracts, and we also saw this in the recent Lebanon contract, which was won by Ukraine," Rylko said.

He forecast export prices would rise only slightly to $300 per tonne in the month after the government-enforced export ban expires on July 1.

He said Russia could export 10 million tonnes of wheat in the coming crop year, up from a previous forecast of 4 million tonnes.

"This (10 million tonnes) is the same as the U.S. government forecast," Rylko said.

Russia is expected to produce an average harvest at worst, with forecasts averaging around 86 million tonnes in a Reuters poll published late last month.

Estimates for the size of the carry-over stocks of older grain at the end of the next crop year range from about 13 million tonnes to more than 20 million tonnes. The current crop is mixed throughout Russia's producing regions, but the bulk of recovery from last year's drought, which slashed the harvest by a third and prompted the government to ban exports, is likely to come in the south, the main exporting region.

The outlook is mixed throughout Russia's producing regions, but the bulk of recovery from last year's drought, which cut the harvest by a third and prompted the government to ban exports, is likely to come in the south, the main exporting region.

The agriculture ministry also said on Wednesday that Russia has sown 96 percent of its target area with spring grains. The total is now 29.2 million hectares, 1.1 million more than last year.

DEMAND PICTURE

Global wheat output in the upcoming crop year is expected at 670 million tonnes, matching demand, according to Scott Reynolds, an agriculture expert with the U.S. Embassy in Moscow.

Despite the balanced picture, Russia will face plenty of competition from its Black Sea rivals.

Ukraine aims to harvest 40 million tonnes of grain this year and export around 15 million in the forthcoming crop year, Prime Minister Mykola Azarov said on Wednesday.

Inflation-fighting export tariffs are also a concern, though conference attendees downplayed the threat.

Deputy Agriculture Minister Sergei Sukhov said no decision was likely this month.

"We don't think it's necessary right now, or on July 1. After that, we will have to see how things develop," Sukhov said. "At this point, it (the tariff) is simply a proposal."

Russian central bank governor Sergey Ignatyev last week mooted the introduction of a floating export duty to keep downside pressure on domestic grain prices.

Source: Reuters  |  #grain   |  Comments: 0   Views: 43

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