October 18, 2011

 

Kazakhstan's state grain trader to return to export market

 

 

Kazakh state-owned grain trader will go back to the export market this season, exporting up to 1.5 million tonnes of the country's grain output, according to the head of the organisation.

 

Beibitkhan Kabdrakhmanov, chairman of the management board at the Food Contract Corporation, forecast that Kazakhstan would have an exportable grain surplus of around 13 million tonnes in the current marketing year.

 

According to Reuters, Kabdrakhmanov said, "We will export and sell in the domestic market. We will look at all the options for selling this grain."

                                               

A bumper crop across the former Soviet Union portends a recovery in Black Sea exports this season, making for a competitive market with prices at a level allowing the region to regain Middle East and North African markets from rivals.

 

Kazakhstan, the world's seventh or eighth-largest wheat exporter in a typical season, is expecting its largest grain crop this year since independence from the Soviet Union 20 years ago.

 

Kabdrakhmanov forecast a 2011 grain crop of between 23 million and 24 million tonnes by clean weight, slightly higher than the most recent government estimate of 22-23 million tonnes.

 

Independent Kazakhstan's previous record grain haul was 20.8 million tonnes in 2009. The harvest fell to 12.2 million tonnes last year, when severe drought affected large parts of the former Soviet Union.

 

The Food Contract Corporation, a 100 percent state-owned company responsible for regulating supply and demand, was absent from the export market last season as it focused on stabilising bread prices in a drought-hit domestic market.

 

This season, the corporation is committed to buy up five million tonnes of the new crop. Kabdrakhmanov said up to 1.5 million tonnes of this grain would be exported.

 

"If we have a bad harvest next year, we should have enough in the reserve to stabilise the domestic market," he said. "I think we can export a million, or a maximum of 1.5 million tonnes."

 

Kabdrakhmanov said Kazakhstan's annual domestic grain demand was around eight million tonnes, while its traditional markets in Central Asia and the Caspian region would consume another six million tonnes.

 

A crop of 24 million tonnes would therefore leave an exportable surplus of 10 million tonnes for sale to non-traditional markets or a total surplus of 16 million tonnes if the traditional markets are included.

 

Kabdrakhmanov said around three million tonnes would be held back in case of drought or a low harvest next year.

 

"Taking into account that there will be carry-over stocks, I think the export potential could be up to 13 million tonnes, including our traditional markets," he said.

 

Kazakhstan exported 5.9 million tonnes of wheat and flour in the marketing year to June 30, 2011.

 

Challenged by vast distances to ports on the Black and Baltic Seas, Kazakh wheat is often uncompetitive with Russian and Ukrainian grain.

 

To help overcome this disadvantage, the Kazakh government is paying a US$40 per tonne subsidy on rail shipments up to a total volume of 2.5 million tonnes this season. The country is also leasing extra wagons to deliver the grain to port.

 

Kabdrakhmanov agreed with an Agriculture Ministry forecast that Kazakhstan could export one million tonnes monthly from November. If wagons can be turned around quickly, the maximum monthly export level would be 1.3-1.4 million tonnes, he said.

 

He said Kazakh grain exports could increase from around February, when Russia and Ukraine finished most of their export shipments and more Black Sea port capacity became available.

 

He said an idea to "grain swap" with Russia to save on transport costs had merit and would be discussed further, but added he had less confidence in a plan to swap grain with Iran to improve access to the Persian Gulf.

 

"If we were to supply our Kazakh grain to northern Iran, would they be able to supply us with grain of the same quality at the Persian Gulf? I doubt it," Kabdrakhmanov said.

 

He said that Kazakh grain would always be in demand for its high quality. "Our grain is considered to be among the best in the world," he said. "Our grain is in demand.