September 29, 2011

Russia's September grain exports up

In August, Russia exported 3.3 million tonnes of grain and may export a new record volume of up to 3.8 million tonnes in September, SovEcon believes.

However, grain exports are expected to decrease in October and decline notably in November.

Wheat exports in August were also a record at 2.7 million tonnes, and they are expected to reach a new all time high of 3.3 million tonnes in September.

High export volumes reflect low prices primarily for wheat. However, high demand fuelled domestic prices not only in the regions located close to ports, but also in the Central Black Soil area.

Currently, the rise of domestic prices is cushioned by low rouble, but if it rises to some RUB28 (US$0.88) per US dollar from current RUB31.70 (US$1), the efficiency of exports will fall substantially.

A fast reduction of exportable stocks in southern Russia forces traders to seek grain in distant regions, which increases expenses. They may be cushioned by an expected cut in the railway fee for Siberia and the Urals region.

SovEcon expects the grain harvest in Siberia to be average with a surplus of 1.5-2.0 million tonnes, part of which may be consumed inside Russia, while in the Urals the wheat crop may be a record one.

Grain shipments may also be complicated in the eastern part of the country by Russia's plan to lease 5,500 railway wagons to Kazakhstan until the end of the current crop year.