Black Sea grain harvest expected to fall by more than one-quarter

Uncertain Russian President Vladimir Putin rules out export 
ban but orders only “surplus” grain be used for exports

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The Black Sea region countries, one of the world’s key wheat exporters, are expected to cut their combined 2012 grain harvest by 27 per cent to 130 million tonnes due to a drought, according to the latest official forecasts.

Hot, dry weather has decimated this year’s grain output from Russia, Ukraine and Kazakhstan, which normally supply a quarter of world wheat export volumes, as the U.S. drought sent global prices for wheat and corn into overdrive.

Adding to upward pressure on wheat prices were persistent rumours Russia will ban grain exports this year, as it did after a drought in 2010. But Russian President Vladimir Putin said there were no talks over such a move, despite his concerns about rising grain prices.

“Of course there is no talk about an export ban, which was justified in the abnormal drought of 2010,” said Putin. Putin’s remarks showed he sided with Agriculture Minister Nikolai Fyodorov and Deputy Prime Minister Arkady Dvorkovich, who have repeatedly ruled out any restrictions on grain exports or special tariffs to curb exports.

However, Putin has ordered that stockpiled grain, which the government plans to sell to cool down prices on the domestic market, not be used for exports. He said only surplus grain should be used for export and told Fyodorov to monitor the situation with domestic prices on a daily basis.

“You should not relax in any way. If you miss two to three days, the result can be catastrophic,” Putin told Fyodorov.

Russia’s exportable grain surplus is officially seen at 10 million tonnes, of which 8.4 million tonnes have already been exported since the start of the 2012-13 marketing year, which began on July 1.

Russia and Kazakhstan have almost completed their 2012 harvest, while Ukraine was 85 per cent done as of last week.

Russia’s harvest is expected to be 71 million tonnes, down from last year’s 94 million tonnes, with wheat down 29 per cent to 40 million tonnes. Ukraine’s grain crop is forecast at 45 million to 46 million tonnes, down from last year’s 57 million tonnes, with wheat at 22.3 million tonnes (down from 15.5 million tonnes last year). In Kazakhstan, the Black Sea region’s top producer of hard wheat, this year’s grain harvest is forecast to be 13 million tonnes, less than half of last year’s 27-million-tonne record.

Weather for the winter grain-sowing campaign remains favourable, except for southern Ukraine.

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