October 4, 2011


Russia's grain export to reach 25 million tonnes in 2011-12



Although the Russian Grain Union increased its forecast for the country's exports on Monday (Oct 3) due to better crop, it also warned that prices may decrease towards the end of the year because of competition from other Black Sea states.


The lobby now estimates Russia's grain exports in the current 2011/12 crop year at 25 million tonnes, compared to the previous estimate of 23 million tonnes, its head, Arkady Zlochevsky, said.


"We will have an exportable surplus of 30 million tonnes but we will manage to export around 25 million tonnes," Zlochevsky said, explaining that infrastructure constraints would restrict export volumes.


Russia, hit by a severe drought last year, banned grain exports from August 15, 2010 to July 1, 2011, after which exporters rushed to ship large volumes of cereals, mainly wheat and barley, to reconquer old markets and to open new ones.


Zlochevsky said that Russia had exported 9.1 million tonnes of grain between July 1 and October 1, including around 3.8 million tonnes in September alone.


"This is a record monthly volume since the previous all-time high of 3.14 million tonnes was achieved in October 2007, but then around 700,000 were exported via Ukrainian ports, while this year we use them less," he said.


Zlochevsky added that Russia is conquering new markets in South East Asia, including Indonesia, Thailand and some other states.


"They demand higher quality wheat with 12.5% protein content. Our benchmark cereal has 11.5% protein content, but we manage to satisfy clients. This season we expect to ship one million tonnes to that region," he said.


Russia may harvest a grain crop of 93 million tonnes, above the officially expected 90 million tonnes, which would be a significant rise from the 61 million tonnes in the drought-hit 2010, but still below the 97 million tonnes reaped in 2009.


"It is clear now that the crop will exceed 90 million tonnes although weather may slightly decrease the amount, but if the weather is favourable, the crop may be 93 million tonnes," he said.


He said the wheat crop is expected to be 55 million tonnes, up from 41.5 million tonnes in 2010, but down from 61.7 million tonnes in 2009, and barley crop 16-17 million tonnes compared to 8.3 million last year and 17.9 million in 2009.


The share of milling wheat is expected to be below average, Zlochevsky added.


"Normally, the share of milling wheat quality is around 67-68% of the total wheat crop, while this year it will be around 60%," he said.


Zlochevsky said that this year Russia is expected to harvest record crops of corn (six million tonnes), sunseeds (9-10 million tonnes), and soy (900,000 tonnes).


Rainy weather in some regions was delaying the winter grain sowing campaign, he said.


"Of the planned 17.8 million hectares, we may sow around 17," he said. "This means that we will have to sow the remainder with spring grains." Winter grains have higher yields than spring grains, but climate does not allow their sowing in some regions.


Zlochevsky said that strong competition from Kazakhstan and Ukraine may push the FOB Black Sea price of wheat with 11.5% protein content to below US$220 per tonne.


"We will be happy if we have US$220 per tonne in December," Zlochevsky said.


The FOB wheat price has declined to US$255 per tonne from US$270, the Institute for Agricultural Market Studies (IKAR) said in a weekly note last week.


Kazakhstan is already competing with Russia, having scored a victory in two recent Egyptian wheat tenders.


Ukraine's exports are slow due to the existence of export tariffs in force until January 1, 2012.


"Ukraine, if the tariffs are lifted from January 1, will also actively influence prices," Zlochevsky said.


He estimated Ukraine's exportable grain surplus at 24 million tonnes and Kazakhstan's at 14 million tonnes in the current season.

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