May 25, 2011

 

Russian government is encouraged to remove grain ban 

 

 

Russia's government is mulling over a proposal from major Russian grain traders and industry analysts to stop its prohibition on grain shipments from July-September, according to a top Russian analyst on Tuesday (May 24).

 

"We have made this proposal, but officials may have other opinions," SovEcon President and CEO Andrei Sizov said.

 

"If exports do not start in July but in October, then the winter sowing campaign will be buried," he added.

 

Sizov said that if the ban continues after July, domestic prices will be depressed and farmers will have no incentive to sow winter grains.

 

Russia, hit by its worst drought in over a century, saw its grain fall cut to 61 million tonnes last year, down from 97 million in 2009, prompting it to impose a grain export ban from Aug 15, 2010 to July 1, 2011.

 

Officials have said the ban may be extended.

 

SovEcon estimates Russia will have an exportable surplus of 15 million tonnes of grain, including 14 million tonnes of wheat and 0.8 million tonnes of barley in the 2011/12 crop year, which starts in July, Sizov said.

 

A resumption of exports on this scale could depress international prices by 10%, he estimated, but added, "This does not mean that all this grain will be exported."

 

Sizov said Russia could export five to six million tonnes of grain between July and September.

 

"For July, practically all export supply contracts have been signed and many contracts have been signed for August. Therefore, active exports may take place only from the middle of August."

 

Sizov added that the government will still have resources to keep prices stable. By SovEcon's estimate, the country will have ending stocks of 16.5 million tonnes by the end of the 2010/11 crop year, including government intervention stocks of 6.8 million tonnes.

 

He did not say whether Russia would export grain after September.

 

SovEcon expects Russia's grain crop to recover from last year's lows, caused by a severe drought, to average levels. It forecasts oilseeds crop to be at all-time highs.

 

SovEcon has adjusted its forecast for this year's grain crop to 80-85 million tonnes from a previous 75-85 million, which is an average crop, compared to 97 million tonnes in 2009 and 108 million in 2008, Sizov said.

 

"We have narrowed the range and we believe that the crop will be in the region of 82.5 million tonnes," Sizov said, adding that this was still an early forecast.

 

"By this time last year, we had a rather optimistic forecast but we felt the drought approaching in June."

 

SovEcon forecasts wheat crop this year to rise to 51.5 million tonnes from 41.5 million in 2010, barley to 14.5 million tonnes from 8.35 million tonnes, corn to five million from 3.1 million.

 

Russia is expected to increase the sowings area to 43.6 million hectares this year from 43.2 million in 2010. However, it will still be lower than the 47.6 million sown in 2009 and 46.7 million sown in 2008, Sizov said.

 

"Although winter-kill losses were lower than the previous years, the winter grain area is rather small, as farmers failed to sow substantial plots with winter grains because of lack of rain during the sowing campaign."

 

SovEcon forecast the spring grain area to be 29.7 million hectares, up from 28.1 million hectares and close to the official forecast of 30.2 million tonnes.

 

The government expects Russia to harvest 85-90 million tonnes of grain this year.

 

It also expects soy crop to be 1.2 million tonnes, close to last year's record and rapeseed crops to hit an all time high of 930,000 tonnes. Russia harvested 670,000 tonnes of rapeseeds last year.