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Restricted Russian grain export may bring wheat world prices 8-10% higher

October 27, 2011, 12:36 UTC+3
The grain export supplies are made with a more intensive pace and will make all 12 million tonnes instead of targeted 11 million tonnes by the yearend
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MOSCOW, October 27 (Itar-Tass) --- After the embargo on grain export supplies following the last year’s drought was lifted Russian exporters are seeking to catch up with the lost revenues, the Nezavisimaya Gazeta writes. The grain export supplies are made with a more intensive pace and will make all 12 million tonnes instead of targeted 11 million tonnes by the yearend. Meanwhile, the authorities restricted the appetites of the exporters with 24-25 million tonnes and probably higher export duties, an official in the Agriculture Ministry said on Wednesday.

A restricted export mechanism is being developed and may be put in practice by early December 2011, director of the department for the regulation of the agrarian and food market and infrastructure development of the Agriculture Ministry Sergei Sukhov elaborated. This mechanism may be also discussed at the international grain forum “The world grain market – prospects, challenges, risks and threats” that will be held in Moscow on December 7.

According to vice-president of the Russian Grain Union Alexander Korbut, Russia makes grain supplies to 70 countries, primarily the countries in the Middle East, southern Mediterranean Sea region and some countries in Southeast Asia. Meanwhile, Russia makes major supplies to the CIS states.

Korbut also stated that from the beginning of this year Russia exported 370,000 tonnes of flour, the export of which was permitted since January 1. This is record supplies of late, he noted.

Meanwhile, Prime Minister Vladimir Putin said on Tuesday that the Russian grain export will reach 24-25 million tonnes. Alongside, he noted that the companies should conclude excessive contracts for grain export. The prime minister stated that the export duties will be raised to avoid the bread deficit in the country.

The Ministry of Economic Development is on guard of the prices. Deputy Minister of Economic Development Andrei Klepach stated that the grain export duty should be introduced, but only in case of a major domestic price growth.

An expert of the BKS Company Bogdan Zykov believes that the grain exports will hardly exceed 24-25 million tonnes. “If restrictive measures are taken, the world grain prices may grow 8-10%, because Russia is among the top three world grain exporters,” he forecasts.

On the other hand, Russia is running a risk to cede some export positions not only to Ukraine, but also to Kazakhstan, where the grain harvest was very good this year as well, he underlined.

 

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