August 20, 2010

Russia's grain imports expected to soar

Russia will have to import millions of tonnes of grain for the first time in more than 10 years after its worst drought in over a century, according to analysts.

Analysts estimate Russia may have to ship in 1.5-2.2 million tonnes, but a report in Vedomosti daily said Russia could import at least five million tonnes of grain this year.

Russia's Agriculture Ministry quickly denied that it was planning to import up to five million tonnes of grain in the 2010/11 crop year. "Nothing of the kind is being discussed here," a ministry spokeswoman said.

Despite the denial, European and US wheat prices rose sharply <Wc1> <BL2c1>, lifted by Russian import prospects that come hard on the heels of a ban on exports for the rest of this year, aimed at conserving stocks and heading off inflation. Stronger than expected wheat export sales weekly figures in US government data also pushed wheat prices.

Imports of five million tonnes would put Russia almost on a par with Egypt, the world's biggest wheat importer, as it competes in international markets, keeping up the pressure on US grain prices which earlier in August soared to two-year highs.

Russia's deadly heat wave, which had sparked wildfires and blanketed Moscow in smog for two weeks, was declared over on Wednesday (Aug 18) but is estimated to have destroyed a quarter of Russia's grain crop and could cut US$14 billion off this year's gross domestic product.