• IKAR in Mass Media

 

 → IKAR in Mass Media → #518

IKAR in Mass Media

Russia May Run Out of Exportable Grain Surplus in November

23 августа 2012 года

Aug. 23 (Bloomberg) -- Russia, the third biggest wheat shipper last season, will run out of its 2012-13 exportable grain surplus of 10 million to 14 million metric tons in November, a survey of 10 exporters and market analysts showed.

All 10 people said the supplies will run out, potentially requiring Russia to impose an export restriction that may include duties, according to the Bloomberg survey conducted over the past four days. Wheat prices have climbed 41 percent this year on the Chicago Board of Trade, as drought curbed crop prospects in top exporter the U.S., Russia and Ukraine, the eighth biggest shipper.

Russia's drought that started in May will mean a wheat crop of 45 million tons, 20 percent smaller than last year, the Agriculture Ministry said on Aug. 8. The government imposed an export ban in August 2010 for 10 months after the worst drought in 50 years caused the crop to be the smallest in at least the preceding 19 years, when the Soviet Union collapsed and Russia became a separate state, according to the U.S. Department of Agriculture.

"The Russian grain harvest is still projected to more than cover domestic needs, but it's unlikely that Russia will export all the surplus grain when the harvest is so meager," said JeniaUstinova, an analyst at New York-based Eurasia Group. "We believe export restrictions may be imposed before the end of the calendar year."

Wheat futures for December delivery rose 0.3 percent to $9.1975 a bushel in Chicago by 4:18 p.m. in Moscow. The price rose for the sixth time in seven sessions and is up 50 percent since the most recent low of $6.11 on June 1.

Harvest Declines

The government cut the grains crop forecast to 75 million tons from 75 million to 80 million tons, Agriculture Minister Nikolai Fedorov said today in a television interview on Rossiya 24 channel in Moscow.

The harvest is down about 12 percent year-on-year at 47.7 million tons due to drought which has destroyed 7.6 percent of crops, including grains and legumes, on more than 5.7 million hectares (14.1 million acres) of fields, the Agriculture Ministry said on Aug. 21.

"It is highly likely that the government will have to resort to some sort of export control method before year's end in order to combat wheat, flour and bread price inflation," said London-based Dan Hofstad, INTL FCStone Inc.'s risk management consultant for the CIS/Black Sea region. "The ultimate question is therefore when."

Russia's exportable surplus is seen at 10 million to 12 million tons and no export restrictions will be needed in 2012, Deputy Prime Minister ArkadyDvorkovich said on Aug. 8.

ZAO Rusagrotrans, the country's biggest grain carrier by rail, expects shipments to approach the government's upper surplus estimate by November. Russia is seen exporting 11.3 million to 11.5 million tons in the July through October period, said Igor Pavensky, the company's chief analyst.

Grain Shipments

Russia shipped 3.33 million tons of grains from July 1 to mid-August, down from 4.08 million tons a year earlier, according to Agriculture Ministry data.

Russia's Grain Union Vice President Alexander Korbut said it's possible exporters will slow down shipments later this year because high domestic prices will make sales inside the country more profitable than sales abroad.

The pace of exports may slow to a minimum because Russian wheat may not be competitive on the world market, said Andrei Sizov Jr., Moscow-based researcher SovEcon's managing director. "Exporters are working even now at a profit margin that is close to zero."

The drought in Russia's main grain-growing regions has raised prices in the country and certain exporters have started selling central wheat to domestic millers in the northern areas rather than exporting, some of the survey participants said.

Milling Wheat

Domestic millers were buying the fourth-grade milling wheat, Russia's main exporting variety among grains, from farmers at 8,700 rubles ($273) a ton in the Southern Federal District in the first week of August, according to the Institute for Agricultural Market Studies, known as Ikar. The price went up to 8,750 rubles a ton last week in the area, according to Russia's Grain Producers' Union data.

The domestic price is high for exporters, who have to add about $45 per ton for grain transportation and handling, according to an average estimate by the surveyed traders. The offer price at the free-on-board basis in the Black Sea port of Novorossiysk would be around $318 in that case, which can't always win tenders, they said.

Egypt, the world's biggest wheat importer, bought 60,000 tons of Russian milling wheat at $313 a ton from Venus International on Aug. 14. Eight other exporters from Russia failed to win the tender because their offers ranged from $317.82 to $329.90 a ton.

Domestic prices in Russia may rise further in the next two months, said Sizov and Oleg Sukhanov, Ikar's chief analyst.

Alternatives

If that happens Russia may sell 10 million tons of mainly wheat and barley until the end of 2012 and about 2 million tons of other grains, mainly corn and rice, until the end of the season on June 30, 2013 with no export restrictions, said Vladimir Petrichenko, director of Moscow-based OOO ProZerno consultancy.

"If an announcement of possible curbs appears, this will stimulate export activity, and we'll get quite another result," Petrichenko said.

Russia's wheat exports are expected to fall to 8 million tons this marketing year from 21.6 million tons last season, the USDA estimated. That would make Russia the fifth biggest wheat exporter after the U.S., Australia, Canada and the European Union, the USDA estimated.

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

There are no comments yet. Be the first!

Only authorized users can comment.