June 1, 2004

Russia Could Be Key Consumer Of U.S. Corn From 2004
 

With the volatility of producing its own feed grains as well as rapidly growing poultry and pork sectors, Russia could soon become a much larger consumer of U.S. grains.

A delegation of Russian grain buyers and a wet miller expressed interest, particularly in U.S. corn, during a recent trip through the Midwest hosted by the U.S. Grains Council.

It was during a stop at Evergreen FS grain elevator facilities in Yuton, Ill., May 18, that the visitors from Russia discussed their current production capabilities and grain demands.

Some areas of Russia are currently experiencing a grain deficit, according to Alexander Kholopov, director of USGC Moscow office. As a result, Dmitry Kutaev, general manager of Russkiy Dar, said grain buyers there will be watching U.S. crop development with great interest this season.

"If the U.S. has good weather until harvest, and if the U.S. has a bumper crop, then we expect U.S. corn to be competitive for buying in Russia," Kutaev said.

Along with a steady supply, Russian grain buyers say U.S. corn is more attractive than importing corn from the Ukraine because of superior quality. Kholopov said freight rates are also favoring American grain.

"Freight rates are an important factor," Kholopov said. "They are dropping, which makes the U.S. corn more competitive in the Russian market."

And Russia looks certain to require more grain in the near future. Kholopov reported that its top industry, poultry, is growing steadily at 10 to 15 percent annually. The pork industry is also expanding and a rapid clip of about 10 percent per year.

Meanwhile, with the end of the crop year in Russia, it appears grain production will not be close to record production of just two years ago. Anatoly Matytsin, deputy executive director of Roskhlebproduct, reported that Russia¡¯s new crop is expected to total about 70 million tons, most of which is wheat. While the number would be a slight improvement over last year¡¯s harvest of 68 million tons, it is not close to the 2002 production of 86 million tons.

At the same time, Kholopov reported that current Russian grain demand is around 75 million tons.

"If you take into account that we have almost zero stocks, it means next year we will have to import five to seven million tons of grains," he said.

The USGC reported that Russia did not import U.S. corn in 2003. It did, however, import some American soybean meal, which was processed in Europe.

This year, though, Russia has already imported 36,000 metric tons (1.5 million bushels) of U.S. corn as of May 14.