February 26, 2009

Russia is forecast to export a record of 18 million tonnes of grain in the 2008-09 crop year, but it is less than initially expected due to competition and lack of state support, an industry official said Wednesday (Feb 25).

 

Russia has such a large surplus that it will keep exporting even at a loss, said Arkady Zlochevsky, president of the Russian Grain Union.

 

Russia harvested a record 108.1 million tonnes in 2008, and was expected to export 20-25 million tonnes but shipments had slowed due to strong competition in export markets and the absence of state support for exporters, according to Zlochevsky.

 

Just 520,000 tonnes of grain were exported in the first 13 days of February, according to the latest customs data, despite an export capacity of 3.5 million tonnes per month, Zlochevsky said.

 

He said with government support, Russia could export 6 million tonnes of grain on top of 14 million tonnes shipped so far since the start of the season, but the government had dropped its plans to subsidise exporters this month.

 

Wheat accounted for most of Russia's grain exports, but Russia could export more barley because shipments from neighbouring Ukraine had declined, Zlochevsky said.

 

Exporters want to export about two million tonnes of barley more, or there would be a stock of 5 million tonnes which would force farmers to plant less barley next year, he said.

 

Zlochevsky said Russia is likely to harvest another bumper crop this year at no less than 80 million tonnes even with poor weather conditions and a decline in sowing area.

 

With carried over stocks from the current season and with consumption of 74 million tonnes, Russia will still be left with a surplus, he said.

 

Both the government and the union were persuading farmers to keep the area sown with spring grains at least at last year's level, as both believed that grain prices next season will be strong, he said.

 

Zlochevsky said the union expected lower grain yields worldwide, as farmers would use less fertilisers and buy less machinery due to the economic crisis, which would reduce world grain stocks and boost prices.

 

If weather conditions are good, Russia may even harvest about 100 million tonnes of grain, he said.