June 30, 2011

Russia's grain exports forecast lower than expected

Russia will not provide record supplies of grains in July after the cancellation of the grain embargo, reported Igor Pavensky, Head of the Department of Market Analysis of the Strategic Marketing Department of CJSC Rusagrotrans.

Grain export shipments were estimated at 1.5-1.7 million tonnes, although the volume was initially expected to total two million tonnes, said Pavensky.

The forecast of grain exports in July 2011 was lower compared to July 2010, when the index totalled 1.94 million tonnes.

The decrease in the forecast volumes was due to the reduction of grain prices on the world market, as well as the absence of Russian grains at international tenders.

Last week, the price of Russian 4-grade wheat from the new harvest decreased by US$20/tonne, to US$255/tonne in Novorossiysk, and US$240/tonne in the small ports.

On the domestic market, grain prices also decreased, particularly in the south where the harvesting has begun.

The demand for wheat fell as grain exporters and processors formed the necessary monthly stocks, causing the price of 4-grade wheat in the south to fall by RUB300 (US$10.73)/tonne to the level of RUB5800 (US$207.46)/tonne. Prices in Siberia were at RUB5,500 (US$196.73)/tonne, and prices in the Black Earth region were at RUB5,700 (US$203.88)/tonne.

According to the Federal State Statistics Service (Rosstat), as of June 1, grain carry-over stocks in Russia (including the intervention fund) totalled 19.08 million tonnes, against 23.9 million tonnes on the same date last year.