February 4, 2011

Russian grain buyer secretly importing soymeal

Russia's state grains buyer is secretly importing soymeal from Argentina in a move likely to cause unease for the government and rival importers alike, industry sources said on Thursday (Feb 3).

Port data showed that a boat loaded with 25,000 tonnes of soymeal destined for Russia is currently waiting in San Lorenzo port. The seller is Japan's largest grain trader, Marubeni Corp., and sources said the buyer is Russia's United Grains Co.

The shipment was due to arrive at the end of February but ongoing strikes in Argentina's ports mean it is likely to have been delayed. San Lorenzo port authorities denied knowledge of the ship.

Set up in 2009, UGC was originally intended to be Russia's main grain exporter, controlling storage facilities, export terminals, and railway transportation. The company's finances have been dented by the Kremlin's ban on grain exports this year, although the government has pledged to inject RUB3 billion (US$102 million) into the UGC by mid-2010 to allow it to resume some of its delayed export infrastructure projects.

The UGC and Marubeni both declined to comment on the matter.

"This matter is shocking for all of the soymeal producers in Russia," said a source. "As a national entity, UGC will probably be able to reach Russian consumers much easier by using its administrative connections.

"Their interest in other markets, combined with their nearly unlimited budgets, will have a distorting effect on the open market in Russia," the source said.

Grain exports have become a highly political topic for Russia this year after the worst drought to hit the country in more than a century cut the country's harvest by nearly 40% and hurt the Kremlin's ambitions to become the world's top exporter.

Soymeal is used for animal feed, which is in high demand from the country's rapidly expanding livestock industry. Russia soymeal consumption is forecast to grow to 1.75 million tonnes in 2010-11 from 1.55 million tonnes the year before. With farmers predicted to produce 1.4 million tonnes this season, soymeal imports are expected to rise to 450,000 tonnes from 411,653 tonnes in 2009-10.

A Russian grain analyst said the UGC's head, Sergei Levin, may be buying in soymeal in the hope of making a profit as prices rise with demand. But this could potentially cause some disagreement with the government, which has said it does not want to stimulate imports of the beans.