December 21, 2010

 

Russia may extend grain export ban beyond July 2011

 

 

Russia is likely to extend its grain exports ban ahead of July 1, 2011, as delayed fertiliser deliveries put spring crops at risk, threatening next year's harvest, the head of Russian Grain Union said Monday (Dec 20).

 

"If we harvest 90 million tonnes then no regulation will be needed, but if we harvest less, say 70 million tonnes, then something will have to be done," said the Russian Grain Union's president Arkady Zlochevsky.

 

Russia harvested 60.5 million tonnes of grain this year after a severe drought, the worst in more than a century, after 97 million tonnes in 2009 and 108 million tonnes in 2008.

 

Farmers have sown 15.5 million hectares of land with winter grains for the 2011 harvest, down from 18 million hectares a year ago. The government aims to increase the area to be sown with spring grains to compensate for the decline.

 

Zlochevsky said farmers have to build up stocks of fertilisers in January to be ready for the spring sowing, as without fertilisers, yields will fall.

 

Fertiliser producers and dealers say that they lack railway cars suitable for domestic shipments, Zlochevsky said.

 

A spokesman for potash miner Uralkali, which is in process of merging with Silvinit to form the world's No. 2 producer of the fertiliser, said the company will honour its obligations to farmers in full.

 

Other fertiliser makers Eurochem and Fosagro could not be immediately reached for comment.

 

He said that international class railway cars used to export fertilisers are unsuitable for domestic conditions. But, he added he believes another reason why fertiliser producers do not supply farmers is that they are waiting for January 1, when they are due to raise prices by 12.8%.

 

Zlochevsky said that farmers had hidden around three million tonnes of grain on top of the official harvest, but the hidden stocks will have little effect on the market as it is concentrated mostly in regions with surplus grain supplies.

 

Zlochevsky said he did not blame farmers for this, as the government compensation only covered around 20% of production costs.

 

He estimated Russia's 2010/11 grain imports at 3-3.5 million tonnes. The bulk of imports is expected to come from Ukraine and Kazakhstan, but Moscow may also import rye from Germany and barley from France.

 

Zlochevsky said that Russia was not likely to import corn from Hungary or Romania, which have joined the EU and may sell inside the bloc at a more advantageous price.

 

Zlochevsky said Russia will consume 67-68 million tonnes of grain in the 2010/11 crop year, due to massive slaughtering of animals mainly at small farms, where owners can't afford to buy expensive grain.

 

So, with this year's crop, carry-over stocks of 26.4 million tonnes and exports of 3.5 million tonnes between July 1 and August 15 the carry-over at the start of the 2011/12 crop year stocks may be around 15 million tonnes.