November 17, 2010

 

Low Russian grain stocks may increase imports

Low grain supply in Russia, once the world's third-largest wheat exporter, may lead to a rise in imports, a leading Russian agricultural analyst said Tuesday (Nov 16).

 

"We will see new developments after the New Year holidays. In the middle of January, grain consumers - millers, animal feed makers, brewers and distillers - will either have no grain, or their stocks will be low, so they will have to replenish them. This will push prices up and make imports efficient," said Andrei Sizov Sr., SovEcon's president and chief executive.

 

As for import volumes, Sizov said that they may well exceed four million tonnes. Earlier this month, SovEcon said it expected four million tonnes of grain imports in the 2010/11 crop year, which started on July 1.

 

Russian grain stocks stood at 41.6 million tonnes as of October 1, down 20.8% from the same date last year, the Russian Grain Union industry lobby said.

 

According to a union bulletin on Tuesday (Nov 16), this figure included 28.5 million tonnes of wheat, down 14.4% from a year ago.

 

Russia has been hit by a severe drought - the worst in more than a century. It officially expects to harvest 60.5 million tonnes of grain this year, down from 97 million in 2009, and the government has said the country will need no imports. Its annual grain consumption estimates vary from 70 million to 78 million tonnes.

 

Grain stocks at large and medium-sized farms, known as "agricultural enterprises", were 23.6 million tonnes, and procurement and processing companies held nearly 18 million tonnes, the union said.

 

Wheat stocks at agricultural enterprises were 14.8 million tonnes, down 25.3% on-year. Wheat stocks at the procurement and processing enterprises were 13.7 million tonnes, up 2.3% from October 1, 2009, while milling wheat stocks were 10.4 million tonnes, up 8.4%.

 

Agricultural enterprises accounted for 74.5% of the total area sown with grains in Russia this year and for 77.9% of the 2009 grain crop.

 

"Differently from other years, the top stocks volume was reached on October 1 and not on November 1 as usual because of an early harvesting start. But the stocks are still the lowest since 1998, and they are dwindling in spite of the export ban," Sizov added.

 

Drought forced Russia to impose a grain export ban from August 15, which is likely to be in force until July 2011.

 

Sizov said that in many regions stocks are 40%-50% of what they were a year ago. And grain from Siberia is now moving to the Central and Volga districts, which were worst hit by the summer drought.

 

He said many consumers prefer buying grain from Siberia and not from the main breadbaskets in the south of the country due to recent outbreaks of African swine fever.

 

Some government officials, traders and analysts say that the country may need to import between three million and four million tonnes of grain in the current crop year. Kazakhstan and Ukraine are expected to be main suppliers.