November 26, 2010

Russia to sell more than half of intervention fund grain until July 2011

The Government of the Russian Federation will sell more than a half of its grain volumes from the Intervention Fund of the Russian Federation up to July 2011.

Ilia Shestakov, the Director of the Department of Regulation of Agricultural food market and Infrastructure development of the Ministry of Agriculture informed about such plans. Taking into account the current situation on the grain market in the current season (July 1, 2010-June 30, 2011), the government plans to sell the major volumes from the Intervention Fund, stated the director.

According to data of the Ministry of Agriculture, during the year, from July 1, 2010, to June 30, 2011, the general grain consumption in Russia will total 77 million tonnes. Grain production in 2010 will total 60.3 million tonnes in clean weight (in 2009-97 million tonnes), the carry-over stocks-26.3 million tonnes, including 9.64 million tonnes of grains of the Intervention Fund.

Thus, in the current season the planned intervention fund grain volumes for the further selling will total over 6.5% of the general grain consumption in the country.

Meanwhile, the officials talked just only about feed grain selling (one third part of the Fund). Victor Zubkov, the Vice Prime-Minister of the Russian Federation, promised that the Fund will sell grains at the purchasing prices. According to data of the Moscow Interbank Currency Exchange, 5 grade feed wheat and barley were purchased on the Governmental interventions in 2008/09 MY, the average prices totalled RUB4,046.1/tonne (US$129.89) and RUB3,723.8/tonne (US$119.54), respectively. 4 grade milling wheat purchasing prices totalled RUB2,455.7/tonne (US$78.83) in 2005/06 MY; and RUB5,101.6/tonne (US$163.77) in 2008/09 MY.

According to data of experts, to date the price of 4-grade wheat at elevators in the southern regions exceeds the level of RUB6,000/tonne (US$192.61). According to data of the National union of grain producers, prices for feed grains even reach the level of RUB7,000-7,500/tonne (US$224.71-240.76). Mass grain selling from the Intervention Fund will assist to hold the prices growth, stated the experts.

I. Shestakov also announced that according to the state budget-2011, RUB6 billion (US$192.61 million) are devoted for all the expenses covering the Intervention Fund grain servicing. In May 2010, V. Zubkov stated that the Government spends about RUB1 billion (US$32.1 million) per month for grain storage in the Fund. Annually – RUB12 billion (US$385.22 million). Thus, at the expense of the Fund volumes decrease, the government will get the double financial economy.