November 11, 2011

Russia to export 17 million tonnes of grain by year-end

Russia may ship up to 17 million tonnes of grain by the end of December, First Deputy Prime Minister Victor Zubkov said on Thursday (Nov 10).

Zubkov told reporters that Russia had already exported a hefty 13.3 million tonnes of grain since July 1, after the expiration of a near year-long export ban imposed due to a severe drought in 2010.

Russia plans to curb exports by a floating export tariff when it reaches 24-25 million tonnes and Zubkov said the government is unlikely to set the tariff until the second quarter of 2012.

"We will not take any decisions now. We will monitor the situation in December, January, February and March. And when the export limits are reached, the floating tariffs mechanism will be introduced," Zubkov said.

He added that businesses should not suffer as they had been warned in advance about the possible tariffs but said three-month grain export contracts for the second quarter of 2012 should be signed with care.

He said the rates of the tariffs would be pegged to both international and domestic prices, but he did not elaborate on how the scheme will work.

Zubkov said that to support the grain producers in Siberia and the southern Urals region of Kurgan, which are located far from exports ports, the government planned to purchase grain from these areas with a possibility to sell it back to producers if prices went up.

Russia expects a bumper crop this year of 90-92 million tonnes, up from 61 million tonnes it reaped last year, but down from 97 million tonnes in the pre-drought 2009.

According to the Institute of Agricultural Market Studies (IKAR) think-tank, Russia had exported a record 12.4 million tonnes of grain in July-October, setting a new record since the same period of 2008/09, when 8.7 million tonnes were exported.

Exports included 11.1 million tonnes of wheat, IKAR has said.