Russia to lift a ban on grain exports on July 1, 2011

In 2009-2010 marketing season grain exports from Russia amounted to more than 21 million tons, whereas in the current marketing season 2010-2011 - about 4 million tons.
In 2009-2010 marketing season grain exports from Russia amounted to more than 21 million tons, whereas in the current marketing season 2010-2011 - about 4 million tons.

This sharp decline was due to last year's drought, forcing the government to introduce a temporary ban on exports of wheat, barley, rye, corn and flour from August 15, 2010.Originally, the ban was to be in force until December 31, 2010, but then it was extended until June 30, 2011, excluding only flour from the list. The government’s aim was to fully meet the needs of the country, and to maintain grain prices at an acceptable level both for the farmers and grain consumers.

From October 2010 to May 2011, grain exports from Ukraine were limited by quotas, the total amount of which was 6.2 million tons. The Government of Ukraine decided to abolish quotas at its meeting held on May 25, 2011.

Soon after Russia's decision to lift the ban on grain exports followed. Obviously, these developments will help address the market concerns regarding stocks of wheat in the second half of the year due to the drought in Western Europe and in southern United States - two important regions which produce grains. The International Grains Council has downgraded its forecast for the wheat harvest in 2011-2012 to 667 million tones, reporting "adverse weather conditions." The Council’s experts speak about a conceivable shortage as consumption in that period could reach 669 m t.

The Russian Federation is the third largest producer of grain in the world, so the ban on exports has led to a sharp rise in grain prices on world markets. Thus, world prices for Canadian wheat in April 2011 soared compared with April 2010 by 74.1%, for the U.S. HRW - by 84.2%

According to the Food and Agriculture Organization (FAO) forecasts, global wheat production this year will be by 3.2% higher than the last year’s poor harvest. This is mainly due to the harvest growth prospects in the Russian Federation. World production of coarse grains to increase by 3.9%, surpassing the 2008 record crop.

The RF Ministry of Agriculture forecasts this year’s harvest at about 85 million tons of grain. Taking into account the carryover stocks of 17 million tons and needs of 69 million tones, the country will not only ensure the domestic requirements but will also be able to export. The traditional buyers of Russian grain - the countries Middle East and North Africa, especially Egypt, retained their interest in imports of Russian grains. In the next few months deliveries can make 2-2.5 million tones, for the whole year - about 15 million tones.

N.P. Volovik – Head of Foreign Trade Department

Tuesday, 28.06.2011