August 18, 2011

Russia's August grain export to hit 2.9 million tonnes

After an almost year-long ban expired, Russia was able to export 2.6 million tonnes of grain in July, and may export up to 2.9 million tonnes in August, including 2.6 million tonnes of wheat, SovEcon said.

Russia's main grain lobby, the Russian Grain Union, expects exports in August may be even higher at 3.5 million tonnes.

High export volumes reflect low prices. However, underdeveloped infrastructure in the country's south where the main export ports are located raise transportation costs.

Exporters start shifting their attention north and eastwards, primarily to the Central Black Soil areas, which will stabilise and may later strengthen domestic prices.

Some exporters plan shipments through Ukrainian and even Baltic ports, which stimulates an additional demand for grain in the Central Russia and in the regions along the Volga river.

July exports were above the market expectations of 1.5-1.8 million tonnes and marked an absolute record volume for this month.

Wheat exports in July were 2.4 million tonnes with Turkey and Egypt the top buyers.

Unlike past years, exports of Russian low and medium quality wheat to southern Europe including Italy, Spain, Greece and Portugal rose mainly due to lower competitiveness of Ukrainian wheat.

Barley exports were 100,000 tonnes, half of which went to Saudi Arabia, while corn exports were 16,700 tonnes.

Russia banned exports of grain and grain products from August 15, 2010 to July 1, 2011 though it reopened flour exports from January.