Russia's exportable grain surplus of 10 million-14 million tonnes will run out in November, possibly spur government to impose export restrictions that could include duties, exporters and analysts say

Andrew Rogers

Andrew Rogers

Aug 24, 2012 – Industry Intelligence Inc.

LOS ANGELES , August 24, 2012 () – Russia's 10 million-14 million-tonne exportable grain surplus will run out in November, possibly spurring the government to impose export restrictions such as duties, according to a Bloomberg survey of 10 market analysts and exporters, Bloomberg reported Aug. 23.

Russia’s wheat crop will fall 20% year-over-year to 45 million tonnes because of a drought that began in May, according to an Aug. 8 statement by the Agriculture Ministry. Deputy Prime Minister Arkady Dvorkovich pegged the nation’s exportable surplus at 10 million-12 million tonnes and stressed that no export restrictions would be imposed for the remainder of this year.

The drought has destroyed 7.6% of Russia’s crops, including legumes and grains, across more than 5.7 million hectares of land, according to an Aug. 21 statement by the Agriculture Ministry. Russia’s harvest is roughly 12% lower year-over-year at 47.7 million tonnes, the statement added.

On Aug. 23, Agriculture Minister Nikolai Fedorov announced that the Russian government was lowering its forecast for domestic grains to 75 million tonnes, the low end of an earlier projection that the harvest would be between 75 million-80 million tonnes.

The country’s grain shipments will likely near the upper limits of the government’s estimated exportable surplus by November, predicted ZAO Rusagrotrans, Russia’s largest rain grain carrier. ZAO Rusagrotrans Chief Analyst Igor Pavensky, said that Russia’s exports from July through October will likely hit 11.3 million to 11.5 million tonnes.

Russia’s grain shipments from July 1 through to mid-August fell 18.4% year-over-year to 3.33 million tonnes, down from 4.08 milllion tonnes during the same period the previous year, according to data from the Agriculture Ministry.

The U.S. Department of Agriculture estimated that Russia’s wheat exports will fall 63% year-over-year to 8 million tonnes, down from 21.6 million tonnes the previous year.

The pay of exports could slow later this year if high domestic prices make domestic sales more profitable than exports, said Russia’s Grain Union Vice President Alexander Korbut.

If exports slow, Russia could sell 10 million tonnes of mainly wheat and barley before the beginning of 2013, and 2 million tonnes of other grains such as corn and rice until the June 30, 2013 end of season without the imposition export restrictions, said OOO ProZerno Director Vladimir Petrichenko.

The primary source of this article is Bloomberg, New York, New York, on Aug. 23, 2012.

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