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IKAR in Mass Media

Russia's grain lobby, analysts see no export cap need

26 июля 2012 года

MOSCOW, July 26 (Reuters) - Russia's 2012 grain exports are likely to be close to multi-year averages and supply is expected to cover domestic needs, a top lobby and analysts said on Thursday which may cool down fears of possible disruption to the country's grain supply.

"Everyone is afraid of some restrictions and is trying to prepare, but still there is no plan," a trader told Reuters on Thursday.

The head of Russia's Grain Union Arkady Zlochevsky said he had heard these fears expressed, but saw no ground for them.

"I think there is no need to impose any limits. The market will regulate itself," Zlochevsky told Reuters.

A newly formed commission on food security chaired by Russian Deputy Prime Minister Arkady Dvorkovich will meet on August 8 to discuss the grain market, Zlochevsky said.

Russia banned grain exports in August 2010 in response to a fierce drought. Dvorkovich said last week he saw no reason to cap exports this year, though speculation was persistent.

The worst drought in more than 50 years in the Midwest grain belt sparked a month-long grains price rally that saw U.S. corn and soybean prices hitting record highs on Friday, raising concern about global food prices.

Wheat prices fell on Thursday as news of a sale of Russian wheat to Iraq cooled talk of possible export curbs in Russia.

Iraq's purchase of 150,000 tonnes of Russian wheat in a tender, announced late on Wednesday, eased concerns, however, while pressuring prices in rival exporter the United States.

SUPPLY AND DEMAND BALANCE

Zlochevsky said Russia's 2012 harvest would be 80-85 million tonnes of grain, down from last year's 94 million tonnes, with an exportable surplus of 15-20 million tonnes, depending on the weather conditions.

"We still have chances to harvest 84-85 million tonnes but we have to track the weather closely," he said, adding that the weather in Volga valley, Urals and Siberia is not quite favourable.

Persistently high temperatures are expected in parts of Russia's Volga and Siberia federal districts, the State Hydrometeorology Agency said on its web site in a weather forecast for July 27-28.

Russian domestic consumption will not exceed 70 million tonnes and can be covered by harvest and stocks, now standing at about 18-19 million tonnes, according to Zlochevsky.

If the weather hurts the harvest dramatically, Russia may also use its 5-million-tonne grain intervention fund or limit its export volumes like it did before, he said.

"If the government is concerned in the context of excessive export (I believe that we do not have such risk this year), it can use the same scenario as it did in 2007-2008, when it decided that we can export up to 13 million tonnes, after which the duty would be imposed," Zlochevsky said.

His grain forecast matches an earlier estimate by Russia's Agriculture Ministry. The ministry is maintaining its forecast for this year's grain harvest at 80-85 million tonnes, a government source told Reuters on Thursday. A spokesman for the ministry was not available for comment.

Russia exported about 900,000 tonnes of grain in July 1-18, which is less than in the same period of last year after Russia lifted an export ban.

Zlochevsky thinks that slow exports show that Russia will not need to impose any restrictions.

Other top Russian analysts are echoing his comments.

"I do not see any possibility or need to impose any export limits in the coming months," Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), said.

Ivan Tchakarov, Russia and CIS Chief Economist at Renaissance Capital, also saw no reason for an export ban.

He said that although expectations for a 15 percent drop in grain harvest compared with last year have made news, full-year crop would still be in line with a historical average of 81.7 million tonnes.

"The situation, therefore, seems a far cry from 2010 when production dropped below consumption, engendering a significant increase in food prices," he said in a note.

Source: Reuters  |  #grain   |  Comments: 0   Views: 53

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