December 8, 2011


Russia's grain exports to slow down amid competition


Amidst competition from rivals Argentina, Australia and Kazakhstan, Russia's grain exports are set to slow, participants at an international grains forum in Moscow said on Wednesday (Dec 7).


Egypt's decision to purchase mostly Argentine wheat at a tender this week was seen as signalling the end of a period when Russia has been able to secure as much as 90% of the business to the world's leading wheat importer.


"There is a new player, Argentina, with super cheap wheat and this breaks the picture which has been stable for the last few months," Dmitri Rylko, General Director of the Institute for Agricultural Market Studies (IKAR) told the International Grains Council (IGC) forum.


Russia is expected to export no less than 25 million tonnes of grain in the current 2011/12 season, deputy agriculture minister Alexander Solovyov told the forum on Wednesday.


One trade source said on the sidelines of the forum that grain exports should reach around 17.5 million tonnes by the end of the calendar year and could reach 25 million total even if the pace slows significantly over the next few months.


IKAR's Rylko was more cautious, saying Russia was capable of exporting 22.5 million tonnes in 2011/12.


"Russia has finished its 'shooting exercise' and may 'shoot' only a few more million tonnes," he said.


Russian grain exports had rebounded strongly after an export ban enacted after a devastating drought saw shipments crumble to a meagre 4.3 million tonnes in 2010/11 from the prior season's 22 million, according to IGC estimates.


"Technically there is a possibility to export 25 million tonnes. But there is a risk of jams as the traders rush exporting grain from distant regions and the ports will simply be unable to process it," Dmitry Grant, adviser to the CEO of the state owned grain trader United Grain Co. He expected grain exports would total 23-24 million tonnes in 2011/12.


Rylko put this year's Russian grain crop at 91.5 million tonnes, slightly lower than the official figure of more than 92 million but a steep increase on the prior season's 61 million tonnes.


Ukraine is also set up step up exports after a slow start to the season caused by export tariffs which were later abolished. But it will also face acute competition.


"Ukraine as a free bonus gave their share of the market to us and this makes our (export) objectives easier to accomplish," IKAR's Rylko said.


He said Ukraine's exports may be about 20 million tonnes, down from a projected 26 million earlier in the season. Kazakhstan was seen exporting 10 million tonnes, bringing the total for the three countries to around 52.5 million.


"We believe this year the record for the three countries will not be overcome," he said.


Russia, Ukraine and Kazakhstan exported a combined 54 million tonnes of grain in 2008/09, according to IGC figures.

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