July 12, 2012

Russia's 2012-13 grain exports may be lowered by 26-34%

Due to a lower harvest and higher domestic prices boosted by logistic costs, Russia is likely to cut grain exports by 26-34% in 2012-13 agricultural season to 18 million-20 million tonnes, Russian Grain Union President Arkady Zlochevsky said Wednesday (July 11).

"Given the 2012 harvest forecast of 85-87 million tonnes, the export potential amounts to 18-20 million tonnes," Zlochevsky told reporters.

In the 2011-12 agricultural season, ending on July 1, Russia harvested 94.2 million tonnes of grain and exported around 27 million tonnes.

Zlochevsky said we are currently facing a transitional period when the country's key grain export regions in the south are running out of grain stocks, while the new grain of 2012 harvest should lie for a month, which pushes domestic prices up.

"We currently have a good level for domestic prices, which automatically means a bad export environment. We should not expect mass exports growth amid the economy we currently have," he said.

Zlochevsky also said Russia had no luck with the weather this season and the bulk of the year's drought hit the southern regions.

"We expect prices to edge up by the winter, firstly due to lower a harvest in the south caused by poor weather conditions, which means lower export resources," Zlochevsky said.

Some media speculated that Russia may introduce a grain embargo similar to the one seen in 2010 after a severe draught killed about a third of its crops. Zlochevsky said that rumours of an embargo were groundless, as Russia still has 19 million tonnes of grain carry-over stocks, which is more than enough even under the most pessimistic harvest forecasts.