December 24, 2007

Russia may change grain export ban to 40-percent duty

Russia's government may reject the Agriculture Ministry's proposed ban on grain exports, replacing it with a prohibitive export duty of 40 percent, with no less than EUR 100 per tonne (US143.8) imposed, according to Kommersant, a Russian online daily.

The ban was supposed to have come into effect in February next year.

An export would be less convenient for exporters because a ban would allow them to write off some of their losses as force majeure.

Exporters stepped up their activity in the autumn and winter of this year in expectation of the coming ban/duty increase and have made money on world grain prices.

The Ministry of Agriculture drafted a resolution to ban grain exports after February 1, 2008, when they had reached 12.5 million tons.

That proposal is now in doubt as it may complicate Russia's WTO negotiations.

The current duty on grain exports is 10 percent and no less than EUR 22 per tonne. That duty was imposed as an anti-inflationary measure.

Russia proposed the ban due to food security concerns.

Traders complain of mixed signals from the government, saying that while there is a danger of excessive exports it remains possible to do so.

World grain prices have been pushed further up recently due to expectations of a Russian ban.