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Record grain exports will not bring Russia a record of income, 16.06.17

Russia predicting new records in grain exports – however, in the following, 2017/2018-m agricultural year. But even if that happens, it does not mean that domestic producers record get rich. Several factors hinder Russia to make good money on grain, even with excellent yields.

Russia can be allocated to exports in the new agricultural year (2017/2018) a record 40 million tons of grain, including 29.2 million tons of wheat, as well as 5.8 million tonnes of maize and 3.5 million tonnes of barley, the Executive Director of the centre “Sovekon” Andrey Sizov, reports RNS. For comparison: this season 2016/2017 grain exports, experts estimate at the level of 37.1 million tons, and an optimistic Outlook. At the Institute for agricultural market studies (IKAR) expect in the new season wheat exports at the level of 28 million tons compared to 27.2 million tons.

The high volume of exports in the new season expected amid another high harvest and record carry-over stocks, says Sizov.

According to the forecast of the Ministry of agriculture, in the season 2017/2018 Russia will harvest 100-105 million tons of grain. More recently, it was expected that the gross harvest in the new season will be 5-10 million tons more. But because of the cool weather in may delayed planting in some regions, in some areas the crops are flooded, where some were hit by hail. And in Siberia and the Urals weather, on the contrary, was hot and arid.

And yet a serious impact on the crops, the bad weather did not have. Plus, this year’s harvest of winter crops has been increased by 1.3 million hectares. So industry experts generally agree with the estimates of the agriculture Ministry’s crop in the new season. In addition, the beginning of a new season in the Russian silos remains a lot of inventory, which also speaks in favor of export growth.

Leadership in wheat in the past

However, even the record figures of export of wheat is not enough that Russia kept its leading position in the world grain market received last year.

In the current agricultural year the first (according to the calculations of American agriculture) will be the US that export to 28.3 million tons. Russian exports, appears to be about 27 million tons.

Next season, the forecasts of the USDA, wheat exports from the US will decline to 27 million tons, but growing supply from EU up to 31 million tons (in – 27 million tonnes). This means that even 29.2 million tons of wheat – and this is the best forecast for the season 2017/2018 – will not help Russia to once again gain world leadership.

However, the loss of ranking is not so important, the President of the Russian grain Union Arkady Zlochevskiy. “If we’re in last place, but earn good money – that’s fine by me. If in the first place, but have some losses, then who needs it?” – said Zlochevsky.

“The Economics of export deliveries not made of sugar”

But with the economy the agricultural situation is not very good. “The Economics of export supplies of sugar. International grain prices remain low and continue to decline. And against the background of strong ruble and kept domestic prices special benefits from exports are not seen,” – says the President of the Russian grain Union. “The entire export is done on the VAT return now to the problem. The tax authorities must prove the entire chain, which has been paid VAT, then the tax is returned to the exporter voluntarily. Otherwise – only through court, and that six months at least. Tax tougher and tougher began to tighten the screws,” adds Zlochevsky.

Eloquently about the deteriorating economy of grain exports, saying prices. Three years ago a ton of wheat in the black sea ports was trading at $ 320, the next season, at $ 250, last season – that’s less than $ 200, and this wheat is trading around $ 160-180 per ton. The price drop is due to the large crop on the world market.

“And we have this season and declined further markets. Many of the countries that consume our grain, collect private higher yields. The demand for wheat declined by 3 million tons. Even at the start of the season said that we have resources of 5 million tons more than last season, and given the reduction in the market need elbows to move the competition to clear the clearing of 8 million tons. Is it real? Here is the season showed that this is impossible,” concludes Zlochevsky.

Finally, if the threat with deliveries to Turkey failed to arrest, you can appear new. In particular, there are risks to a full stop sales of Russian grain in Egypt, noted in the “Sovekon”. But this is the world’s largest buyer of Russian grain (18%).

Such sad prospect promises the solution to one of the Egyptian courts dealing with the claim about return to the policy of complete lack of ergot of import shipments of wheat against the world’s accepted standard of 0.05%, which is now in effect in the Arab Republic. The lawsuit was filed by quarantine inspection staff of Egypt, but not on behalf of the Agency, and on behalf of its employees, as citizens, reports Thomson Reuters. The court’s decision is expected on June 13, and although technically such a requirement (the complete absence of ergot) is not feasible, the claim threatens the implementation of existing contracts of Russia with the Egyptian state importer GASC.

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