May 27, 2011

Russian grain embargo decision to be made within days

The Russian government will decide within days whether the ban on grain exports is to be lifted on July 1, Deputy Prime Minister Viktor Zubkov said late Wednesday (May 25).

Zubkov said there was "a large degree of probability" that the embargo would be lifted. He said the expected 85-90 million tonnes harvest this year and the remaining 17 million tonnes of grain from last year's harvest ensured there was sufficient amount of grain in the country, which made the export embargo unnecessary.

Zubkov also said winter crops wintered well and were in good condition, and spring crop planting was also going well, faster than last year.

Russia banned grain exports last summer after the worst drought in more than a century slashed the harvest by around a third, to 63 million tonnes. However, speculation has been building that the government may soon lift the embargo due to falling internal prices and hopes for a 90-million-tonne harvest this year.

Russian domestic grain prices continued to stabilise last week, reversing an earlier long-term trend of falling prices, according to data from the SovEcon agricultural markets analysis body.

SovEcon attributes the stabilisation to increasing demand from grain traders, who are accumulating wheat in the expectation that the government will soon lift the export ban.