July 25, 2011

Valars optimistic on Russian grain exports, sceptical on Ukrainian quality

Valars Group, a major producer and exporter of Black Sea grains, is optimistic on Russia's grain export volumes, but said that Ukraine will not be able to meet the quality needs of buyers.

Kirill Podolsky, head and core owner of Valars Group, said Russia's core clients have returned seeking cheap grain, despite having their confidence rocked by last year's export ban, which expired July 1 this year.

"When French wheat costs US$275 per tonne, the companies who are trading Russian grain at US$244 win," he said, adding that US wheat would also have difficulty competing with Russian and Ukrainian grain at Chicago prices of US$250.

On Thursday (Jul 21), Russia's Agriculture Minister Yelena Skrynnik was quoted as saying Russia expected grain exports of 18 million tonnes in the 2011-12 crop year.

Podolsky said the consequences of the ban had been overcome in the first half of July, and believes Valars, which grows Russian and Ukrainian grain for export and also exports Kazakh grain, may export "a minimum of 15 million tonnes".

Podolsky said that as early as last year GASC, Egypt's state grain buyer, had started checking the quality of grain at loading.

Quality concerns will make it difficult for Ukrainian grain to compete with Russian offers at GASC tenders, but private companies may buy Ukrainian wheat, he said.