Putin Says Grain Export Ban May Remain – for Aug. 16, 2010

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MOSCOW

Russia’s Prime Minister Vladimir Putin said last Monday that a ban on grain exports might be extended beyond Dec. 31, the day of its expiry, as a fall in this year’s crop could be worse than expected due to a severe drought.

“The latest crop forecast by the Agriculture Ministry is 65 million tonnes, but it may be 60 million tonnes,” Putin told a government meeting.

“If someone is waiting for Dec. 31, he is waiting in vain. A decision may be taken only after the harvesting campaign results are clear.”

On Aug. 6, Egypt’s main state wheat buyer said Russia had agreed to consider rescheduling wheat supply contracts in October when it will review the grain situation.

Earlier, a Russian government source said that the cabinet will decide in October whether to extend the ban or scrap it.

SovEcon agricultural analysts said Russia’s wheat exports in 2010-11 may be around three million tonnes, plunging from the 18 million tonnes the International Grains Council estimate were shipped in 2009-10 and made Russia the world’s No. 3 exporter.

“The ban (on grain exports) will most likely be extended into the new year,” SovEcon said, adding that an expected decline in barley production would increase the demand for wheat to produce animal feed in the regions hit by drought.

Little grain left for new exports

Putin told the meeting that Russia was expected to have a supply of 90 million tonnes, which included 60 million tonnes of output, 21 million tonnes of carry-over stocks and 9.5 million tonnes of the government intervention stocks.

He said this was sufficient to cover Russia’s estimated domestic consumption this year of 78 million tonnes.

However, the country’s carryover stocks, estimated between 21.7 million and 24 million tonnes as of July 1, already include 9.5 million tonnes of the government’s intervention stocks, according to SovEcon and the Russian Grain Union.

That means that Russia’s grain supply this year could be as low as 81.7 million to 84 million tonnes which leaves a surplus of only 3.7 million to 6.0 million tonnes – not enough for carry-over stocks and allowing practically no new exports.

Putin added that the situation was aggravated by the fact that some key regions will not be able to start the winter-sowing campaign this year.

Winter crop losses will be difficult to compensate with spring grains, which have lower yields.

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Ifsomeoneiswaiting forDec.31,heiswaiting invain.Adecisionmay betakenonlyafterthe harvestingcampaign resultsareclear.”

VLADIMIR PUTIN

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