September 6, 2010

Russia may lift grain export ban in July

The belief that Russia will wait until next autumn to lift its ban on grains exports is misguided, with the government likely to consider lifting the ban in July, the analysis group SovEcon has said.

Russian prime minister Vladimir Putin said noted that the lifting of the export ban can only be considered after next year's crops have been harvested. This statement, widely seen as a key factor in wheat prices rises over the last 24 hours, was seen as a reference to the close of the autumn grains harvest, notably of corn, in November.

However, analysts said that statement was more likely a reference to the summer harvest, which starts in late June.

Russia was the world's third-biggest wheat exporter in 2009-10, when it overtook the US in production, before being laid low this year by its worst drought in history.

Moscow-based SovEcon has been at the forefront in revealing the drought damage to Russia's crop, and the aftermath of the devastation.

If taken literally, Putin's comments could imply that a ban might not be lifted until December 2011, when the first official harvest estimates are released, or even March 2012, when final data is published.

SovEcon's assessment comes a day after Russia's agriculture minister, Yelena Skrynnik, estimated that the country's harvest could recover to 85-90 million tonnes next year, below highs in 2008 and 2009, but above historic levels.

The interpretation of Putin's statement as extending Russia's export curbs well beyond a year has been seen as a key support to wheat prices both on Thursday and Friday.

Meanwhile, Chicago wheat for September stood 1.4% higher at US$6.90 ½ a bushel at 14:45 GMT.

However, some observers had expressed scepticism over such a prolonged deadline, viewing it as potentially an attempt to encourage farmers to sell grain, and keep a lid on food prices, rather than hoard it until export markets reopened.