March 26, 2012

 

Stocks sales aid Russian grain export recovery

 

 

Forecasts of a revival in Russia's grain exports from a winter slowdown are being boosted by a sales programme from state supplies, which looks set to be opened to exporters besides local consumers.

 

The Russian government, under pressure from the country's powerful livestock farming lobby, earlier this week began talks on procedures for a sell-down of seven million tonnes of grain accumulated through intervention buying.

 

However, it appears that bidding will not be restricted to buyers for the domestic market.

 

"It is a big decision, what type of enterprise will be allowed to buy this grain," Andrey Sizov, the managing director of influential crop consultancy Sovecon said. "It looks likely that all companies, including exporters, will be allowed to participate."

 

A further influence on the impact of the disposal on potential exports is the regions in which state granaries will be opened up.

 

While the livestock lobby would prefer releases in central Russia, where many livestock farms are based, the fate of southern silos closer to Black Sea ports, and holding some 1.5 million tonnes of grain, will have a bigger influence on exports.

 

Viktor Zubkov, the Russian deputy prime minister, has said that the southern supplies can be sold if needed.

 

Sales will save the government storage costs of US$2 a tonne per month, besides boosting domestic supplies.

 

"But I do not think they will sell more than one million tonnes in the south," Sizov told Agrimoney.com.

 

The comments came as Sovecon forecast that Russia's exports could hit 27.2 million tonnes in 2011-12, despite a slowdown in shipments last month to 1.2 million tonnes, as cold weather snarled up logistics.

 

"Exports could reach four million tonnes from April to June, and as a result exceed slightly 27 million tonnes," the Moscow-based group said.

 

The slower rate of shipments also reflects a dearth of outstanding supplies in the south, where stocks were depleted by a bumper start to 2011-12 exports, leaving merchants to source grain in Russia's interior.

 

After transport costs, this crop is less competitive on world markets.