March 31, 2011
 

Russia's grain exports to increase by small margin

 

 

Russian grain exports will change slightly in 2011-12, increasing by only one million tonnes, and even that number is clouded by the thought of political whim ahead of parliamentary and presidential elections.

 

The grain output in the Black Sea agricultural powerhouse will rebound strongly from last year's drought-hit levels, increasing by 23 million tonnes, or 38%, to 84 million tonnes, USDA attaches in Moscow said.

 

This figure is similar to the reduced 84-85 million tonnes estimate announced by Russia's deputy prime minister, Viktor Zubkov, two weeks ago, and with predictions from the Russian Grain Union, but near the top of the range given by influential analysis group, SovEcon.

 

However, exports will increase by only one million tonnes on top of the 4.5 million tonnes expected for 2010-11, grain mostly shipped before the ban was enforced in August, but including some flour trade on which curbs were lifted in January.

 

Such a number would be way lower than levels recorded since Russia started over the last decade building up a reputation as a force in grain, with exports hitting 21.4 million tonnes in 2009-10.

 

The attaches warned of the direction of political winds on the prediction, with Russia's parliament, the Duma, facing elections this year, with presidential poll due in 2012.

 

While saying that the recommencement of grain exports may be phased in slowly, with polls ahead, government policy might be disjointed, inconsistent and reliant on the image of the Unite Party and its leaders rather than with emphasis on long-term investments, the attaches said in a report.

 

Already, political and social concerns were dogging the implementation of measures to support farmers, through methods such as inexpensive loans and partially sponsored fuel, in the midst of the key spring sowing season.

 

"The implementation of these policies is lagging behind farmers' spring needs," the attaches said. "The unpredictability of short-term government policy creates uncertainties in the domestic grain market and hampers farmers' decisions and abilities to develop grain production in 2011."

 

Cultivators themselves are heavily debt ridden after last summer's pathetic harvest, with the export embargo constraining the benefit from lower production of higher grain prices.

 

Local wheat is some US$100 a tonne less expensive as compared to on the world market.

 

The prediction of poor grain export prospects in 2011-12 is in contrast with some more optimistic analysis from other groups.

 

Quantities of exports from the Black Sea grain states, Kazakhstan, Russia and Ukraine, are seen as vital for price prospects on international grain markets, with the countries renowned for fierce competitiveness.