August 9, 2010
Russia's state grain trader said Friday (Aug 6) it was increasing security around government grain stocks, as supplies dwindle amid the country's worst drought in decades and fires continued to rage.
The decision was made due to "a deterioration of the situation in Russia's grain market, caused by fires and drought in over 25 regions of the country," United Grain Co. said in a statement.
Some 700,000 tonnes of grain are awaiting export ahead of a Russian government's export ban, the association said. On Thursday, Prime Minister Vladimir Putin said Russia would ban grain exports from August 15 to the end of the year to protect local grain users from high prices and scarcity.
The news caused wheat prices to surge, extending a rally that is driving up the cost of corn and other substitutes, and underscoring the risk of a broad shock to the global food supply.
The Russian Grain Union, based in the headquarters of the Agricultural Ministry, has asked the Russian government to postpone its ban on grain exports to September 1 in order to allow grain en route to ports to leave the country, but it hasn't yet received a reply, spokesman Anton Sharapin said Friday.
The Novorossiysk port on the Black Sea has 500,000 tonnes of grain awaiting export in grain elevators, and a further 200,000 tonnes is en route to the port in railcars, with additional grain in trucks, he added.
Russia has also asked Belarus and Kazkhstan, its partners in a recently formed customs union, to follow it in halting grain exports, fearing that Russian grain will be exported via the two countries.
Putin's move reignited fears that nervous governments will begin hoarding their own supplies, potentially causing a shortage. Nations that already are struggling to feed themselves are scrambling to lock in deliveries, while food companies are facing costs, as are farmers who need grain to feed livestock.
However, the world's stockpiles are still much higher than two years ago, and prices far lower, but many worry the situation will worsen. The biggest weather-related concern is that the drought will persist into early fall, the planting season for next year's crop.
