November 26, 2012

 

Kazakhstan intends to boost grain supply to Siberia

 

 

In order to replenish Russian stocks depleted severely by drought, Kazakhstan plans to increase cross-border grain exports to Siberia this season.

 

The Kazakh agricultural officials said on Friday (Nov 23) that though Kazakhstan's grain harvest more than halved this year, the Central Asian country - one of the world's 10 biggest wheat exporters - has sufficient carryover stocks to increase shipments to its northern neighbour.

 

"Siberia will be an interesting market for us this year," Deputy Agriculture Minister Muslim Umiryayev said. "As a result of the drought in Siberia, we believe that we will become active in exporting grain to Russia from January."

 

Hot and dry weather in Russia, historically the world's number three wheat exporter, slashed the country's wheat harvest by a third this year and sent domestic prices to record levels. The drought was the second in three years. Russia has so far eschewed a repeat of the export ban that followed the disastrous harvest of 2010.

 

With exports forecast to outstrip the country's surplus, Russian grain stocks could fall to critically low levels this season. The Food Contract Corporation, Kazakhstan's state-owned grain trader and food market regulator, said the former Soviet republic could help to meet shortages in central Russia, Siberia and the Altai region.

 

"If Russia wants it, I'm sure Kazakhstan can supply it," Nurbek Daiyrbekov, the corporation's executive director, said. "Border regions (of Russia) imported 440,000 tonnes last season. All of this was in the late spring and summer. I hope it will be more this year," he said on the sidelines of a grains conference.

 

Agriculture Ministry data showed shipments to Russia had already begun and were on track to exceed last season's total.

 

Anna Buts, director of the ministry's land development department, said that Kazakhstan exported 229,800 tonnes of grain and flour in grain equivalent to Russia between July 1 and October 1, the first three months of the marketing year. Wheat and flour in grain equivalent accounted for "99%" of this total, she said.

 

Kazakhstan has estimated its total grain exports, including flour in grain equivalent, at between seven million and eight million tonnes in the year to June 30, 2013. That is down from a record 12.1 million tonnes last season but more than it shipped in 2010-11. Since the current marketing year began on July 1, it had shipped around three million tonnes of grain, said Umiryayev.

 

But monthly volumes have almost halved - 600,000 tonnes were shipped in October - since government subsidies on prohibitively high rail tariffs to Black Sea ports were removed in August.

 

Kazakh suppliers were fetching higher prices for their grain on the domestic market than in Russia due to the high cost involved in delivering it to the border, Daiyrbekov said. But as Russian stocks diminish, this would begin to change, he said.

 

Kazakhstan expects its 2012 grain crop to be 12.3 million tonnes after cleaning and drying, less than half of the previous year's post-Soviet record, but complemented by carryover stocks of 9.8 million tonnes as of July 1 - also a record high. Annual wheat and flour exports are unlikely to increase significantly over the next few years, however, as Kazakhstan encourages farmers to expand into meat production and oilseeds.

 

"Over the next five years, we do not expect any significant increase in exports from Kazakhstan," Guldzhakhan Kurbanova, economist for the Food and Agricultural Organisation's Europe and Central Asia office, told the conference. "First and foremost, this is a result of the government's policy of diversifying from wheat and grain cultivation into oilseeds and feed crops," she said. "We don't expect any sharp spike, but, in the long term, Kazakh authorities, producers and exporters will need to pay more attention to the East - China and India - where there is always stable growth in demand."

 

Daiyrbekov, of the Food Contract Corporation, said Kazakhstan exported 188,000 tonnes of milling wheat to China last season and that its eastern neighbour had "good prospects of becoming a traditional export market for Kazakhstan".