Russia Rejects Calls to Postpone Grain Export Ban Scheduled for Next Week

Russia’s government will maintain plans to halt grain exports after the country’s worst drought in more than 50 years, rejecting calls from farmers, exporters and millers to delay until September the ban due to begin next week.

Farmers should avoid holding on to produce in anticipation of higher prices as the government is ready to intervene in the market to lower rates for grain, First Deputy Prime Minister Viktor Zubkov said at a government meeting in Moscow today.

The Russian Grain Union is seeking to delay until Sept. 1 the ban planned from Aug. 15 through yearend to avoid damaging the country’s reputation as a supplier and ease port and rail bottlenecks. Russia may adjust the timing after Oct. 1 when the outcome of this year’s harvest and winter sowing is clearer, a government official who declined to be identified said Aug. 6.

The government may prepare an order to sell grain from state stockpiles by Aug. 20, Zubkov said, adding that a date hasn’t been set to start sales. Russia’s largest banks including OAO Sberbank and OAO Rosselkhozbank also agreed to lower interest rates and refinance 127 billion rubles ($4.2 billion) of loans to farmers after government requests, he said.

Prices for grain, milk and bread will stabilize in the next two to three weeks, he added.

Russian farmers will sow 12 million hectares (30 million acres) of winter grain this year, after about 18.5 million hectares in each of the last two years, Zubkov told reporters in Moscow, citing an Agriculture Ministry forecast. More than 6 million hectares will have to be sown with lower-yield spring crops, he said.

The national grain harvest may drop to as low as 60 million to 65 million metric tons, compared with 97.1 million tons last year, according to the government.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

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