Russia is unlikely to lift its grain export ban until the end of the year and may even extend it into 2012 to ensure the country has enough grain to cover its own needs, analysts say.
A prolonged heat-wave and drought in summer 2010 cut Russia’s grain production by 36% and forced the government to ban wheat, barley, rye, corn and flour exports for the first time in the post-Soviet period. The embargo was initially in force until December 2010, but was later extended to June 30, 2011.
Agriculture Minister Yelena Skrynnik said in February that discussions about lifting the export ban could begin in October when it is clear how much grain Russia has harvested. Russia needs an 85 million ton harvest to lift the embargo, she said.
First Deputy Prime Minister Viktor Zubkov later said he did not rule out an extension beyond the end of 2011.
Analysts forecast Russia's 2011 grain production at 80-85 million tons, while domestic consumption is expected at 73-77 million tons.
"Since some carry-over stocks are left at about 7.5 million tons, we can accumulate some export potential, but it will be limited," said Institute for Agricultural Market Studies analyst Oleg Sukhanov, who forecasts the harvest at about 80 million tons.
"But the government believes it necessary to make sure the crop is first harvested, then counted and sorted by grain class by each region. This means that in theory the ban could be lifted in November or December, or from January 2012."
Local Russian prices increased despite the export ban as fears of the effects of a global food crisis encouraged producers to hold onto their grain.
Before last summer’s crisis, Russia held a secure position in the top four global grain producers, largely thanks to a record 108 million ton harvest in 2008, which slashed internal prices and made local grain more competitive.
In the 2009/2010 agricultural year, Russia harvested 97 million tons of grain and exported 21.3 million tons, mostly food wheat and barley, worth about $3.6 billion, or 13% of the world market share.
Russia exported just 3.7 million tons between July 1 and August 15, 2010. The United States, France and Australia took over Russia’s share after the ban was imposed.
"In the nearest future, we will not have enough export potential to return to the volumes of 2008/2009 or 2009/2010. It will certainly not happen next season," says Sukhanov.
Analysts say the hungry market would welcome Russian grain. The market first started to experience a shortage in 2008 as emerging economies increased consumption, while storms and droughts in leading agriculture producers such as Australia damaged supplies.
The International Grains Council expects wheat production in the July 1, 2010/June 30, 2011 season to fall by 30 million tons, and carry-over stocks to decrease by 7 million tons. Wheat consumption is expected at 661 million tons, which is 12 million tons more than in 2009/2010.
"The world food market and most cereals markets have been deficit-ridden for many years,” says Tatyana Bobrovskaya, a consumer goods analyst at Moscow-based bank IFC Metropol . “International grain reserves are decreasing, demand for grain will be high and Russia is unlikely to need special measures to find consumers for its grain. To what extent Russia recovers its position as an exporter depends entirely on the harvest."
MOSCOW, March 15 (RIA Novosti)
