January 16, 2009

Russia's grain exports declined in December 2008 to 1.7 million tonnes, and shipments are expected to continue falling in January.

SovEcon expects January shipments to decline to 1.3-1.5 million tonnes. Russia shipped 2.85 million tonnes in October 2008, and 1.76 million tonnes in November 2008, marking a continuous decline in exports.

Wheat exports in December fell to 1.38 million tonnes from 1.6 million tonnes in November. However, the decline was lower than expected, as exports were supported by stronger international prices and a weaker rouble despite active government purchases.

Barley exports reached 320,000 tonnes in December, up from 136,000 tonnes in the previous month.

While Russian wheat was competitive, but the weakening of global wheat prices this week and the narrowing gap between French and Russian supplies had dealt a blow to it.

Average offer prices for EU grain fell by nearly US$10 to US$193 per tonne FOB from the previous tender held on January 8. Russian grain declined US$2 to US$190 per tonne, the spread falling to US$3 per tonne from US$11.

SovEcon said even a slight decline of world prices may reduce demand for Russian grain. A weaker rouble will support exports, but stronger domestic prices will keep more grain at home.