December 29, 2010

Surging grain prices force Russian to cull herd

The scorching heat wave in Russia and accompanying drought has forced many farmers to begin culling their herd as feed grain prices continue to soar.

A disastrous grain harvest this year forced the Russian government to suspend exports of grain which was designed to reduce the rising cost of feed grain.

It seems markets are not paying attention though with high domestic prices for feed barley in particularly continuing to be a problem.

Russia is now looking at importing up to three million tonnes of feed grain to try to prop up a harvest which is 38% less than the previous year.

Kazakhstan, the Ukraine and the EU are in talks with Russia to sell grain with shipments likely to start next year.

The government, which imposed a ban on grain exports from August 15, 2010 to July 2011, was counting on increasing the area sown with spring grain to compensate for a loss of winter crop area caused by the drought.

However such plans could be overly optimistic, Russian Grain Union lobby group president, Arkady Zlochevsky said.

"There may be no increase in the spring sowing," he said.

"Taking into account that we have less fertiliser than a year ago and we have stopped buying new machinery, these two factors will inevitably affect next year's crop."