August 2, 2012

 

Russia's grain production to decline 10-15% on severe weather

 

 

Due to unfavourable weather conditions, Russia will harvest 10-15% less grain this year than in 2011.

 

"The harvest shortfall may reach 12 million tonnes in some Russian regions and 14 million tonnes across Russia," Agriculture Minister Nikolai Fyodorov told a meeting chaired by Prime Minister Dmitry Medvedev to discuss the on-going grain harvest.

 

Russia harvested 94.2 million tonnes of grain in 2011 but is expected to harvest only 80-85 million tonnes this year.

 

Russian wheat prices have grown since the start of this summer, hitting a record high of RUB8,800-8,900 (US$273-276) per tonne in early July and reaching RUB9,500 (US$296) in several regions, sparking fears of an eventual increase in fodder and meat prices.

 

Russia's wheat prices have shot up owing to the drought in the US, and some Russian regions and heavy rains in the south of Russia earlier this year. The Russian Agriculture Ministry's recent downgrade of this year's grain harvest forecast from 94 million tonnes to 80-85 million tonnes also drove wheat prices up.

 

The Russian Agriculture Ministry has also downgraded its export forecast from the 20 million tonnes previously expected to just 16 million tonnes. Medvedev instructed the government to calculate and set the level of intervention required on the grain market to stabilise wheat prices.

 

"I would like you to define, within the shortest time possible, both the regions and the amounts of grain intervention," Medvedev said, adding Russia's intervention fund currently contained about five million tonnes of grain.

 

Medvedev admitted there were cases of grain price manipulation and called on the government to stamp it out.

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