Russia to Reopen Grain Exports

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Russia will reopen grain exports in July after an absence of nearly 11 months from the world grain market following last summer’s devastating drought that slashed production by 37%.

Russian Prime Minister Vladimir Putin announced on Saturday that the country will lift its ban on grain exports as of July 1, following the recommendation of First Deputy Prime Minister Viktor Zubkov, who oversees government agricultural policy.

 According to Putin’s official Website, Zubkov reported to Putin that the supply of grain on the Russian market was adequate, winter crops were in a “good state” and planting of spring grains was moving at a “good pace.”

Despite a slow start, spring planting of grains is progressing much more quickly than last year. About 24 million hectares have been sown, which is a 10% increase against the previous year, Zubkov said.

Russia officially expects to harvest 85-90 million metric tons (mmt) of grain this year after the drought cut grain production to 61 mmt last year from 97 mmt in 2009 and 108 mmt in 2008.

The resumption of Russian exports will boost competition in world grain export markets, especially for wheat export sales, which could drive down prices.

There are large amounts of grain in southern Russia that could be exported from July 1, Zubkov said.

In a Monday meeting with Russian President Dmitri Medvedev, he said that Russia could export about 15 mmt of grain in 2011-2012 and could have carryover stocks of 18.5 mmt by July 1, 2012.

The head of the Russian Grain Union, an industry lobbying group, estimated that Russia may export up to 20 mmt of grain if production reaches 85-90 mmt.

USDA in its May world supply/demand update forecast that Russia would export 11.94 mmt of grain in 2011-2012, including 10 mmt of wheat.

 

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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