September 28, 2010

 

Russia may lift grain export ban this year

Russia's ban on grain exports could be lifted this year, but harvest figures still show that the country could ill afford to ship its grain abroad, a Russian diplomat said on Monday (Sep 27).

 

The Russian government imposed the export ban from August 15 to stabilise domestic prices after the worst drought in more than a century killed a significant part of the crop.

 

Oleg Kobiakov, first councillor of the foreign ministry's international organisations department, said Russia had sufficient grain stocks.

 

Russia's grain output, including wheat, is estimated at 55 million tonnes, with 25 to 26 million tonnes in reserve against an expected domestic demand of 77 million tonnes, Kobiakov said.

 

However, President Dmitry Medvedev and Prime Minister Vladimir Putin have said the ban is unlikely to be lifted before late 2011.

 

"Domestic consumption is a priority," Putin's spokesman Dmitry Peskov said on Monday (27 Sep). "The ban may be lifted when we have a clear idea of what the carryover stocks are going to be." He did not say when this might happen.

 

Grain stocks carried over from year to year are normally calculated on June 30, the end of the crop year, or at the start of a new crop year on July 1.

 

From the start of the current 2010-11 crop year on July 1 until August 15, Russia is estimated to have exported 3.6-3.8 million tonnes of grain.

 

The figures of 55 million tonnes of output and 26 million of grain stocks, versus consumption of 77 million, leaves Russia with carryover stocks of only 4 million tonnes on July 1, 2011, most of which have already been exported.

 

The latest Agriculture Ministry estimate for this year's grain crop is at a little over 60 million tonnes, down from 97 million in 2009 and 108 million in 2008.

 

That estimate is 5 million tonnes higher than both Kobiakov's figure and the ministry's harvest data from last week showing 55 million tonnes of grain by bunker weight by September 22.

 

Russia's drought and subsequent ban on exports sparked a rally in global grain markets, pushing benchmark US wheat prices to their highest level in two years.

 

Although wheat prices have dropped by 13% since the August peak of US$8.41 a bushel, corn prices reached a new two-year high on Monday (Sep 27) on estimates of lower US yields and prospects of strong global demand.