October 12, 2011

Russia to limit grain export

In case foreign grain deliveries amount to 23-24 million tonnes, Russia might limit grain export, Viktor Zubkov, First Deputy Prime Minister said in Moscow Wednesday (Oct 12).

He said that the government has issued instructions, and they have been all but implemented, for a draft resolution to be put forward before November 1 to allow the government to limit the export of grain in order to keep domestic prices stable and to meet domestic requirements in grain.

The restriction mechanism has been agreed with all ministries and departments, Zubkov added. He said it would be submitted to the government by November 1 this year and would allow the government to undertake customs regulation measures. On possible restriction measures, he said this could take the form of floating grain export duties.

Zubkov said that this year's gross grain harvest would total 90-92 million tonnes. Grain is still being harvested and "active export deliveries are under way", he said. Domestic prices "are rather good for businesses, agricultural producers, flour manufacturers and cattle farmers", Zubkov added.

He said that grain export had so far amounted to about 11 million tonnes and estimates show that the same pace of export deliveries will be maintained in November and December. He added that grain exports will reach 18-19 million tonnes by the end of the year.

He also said that Russia's domestic market requirement was 72 million tonnes of grain. "However, decent rollover stocks should be secured by July 1, 2012," he added. According to Zubkov, the stocks should be 15-16 million tonnes and in this case actual export deliveries should not exceed 23-24 million tonnes.

Zubkov added that the grain market should be monitored all the time to keep prices real, so that they don't get feverish and the price does not rise. He said that "real prices" would be RUB5,600-6,500 (US$178-206) per tonne. "This is the top price, no more than that," Zubkov said. He said that the current foreign market price was rather attractive, at US$230-235 per tonne, or more than RUB7,000 (US$222).

Zubkov stressed that decisions on possible grain export restrictions would be made in advance and therefore would not come as a surprise to businesses.