Related News:
Russia Lowers Grain Forecast Again, May Sell From Reserves After Drought
Russia, the world’s third-largest wheat producer, cut its grain-harvest forecast and pledged to sell from state stockpiles if domestic prices advance in 2011.
The crop will be 60 million metric tons this year or “possibly slightly more,” Deputy Agriculture Minister Sergei Korolyov said at a conference in Moscow today. Agriculture Minister Yelena Skrynnik said Sept. 2 the harvest would be 60 million to 65 million tons and the government had originally anticipated production similar to last year’s 97.1 million tons.
Russian crops were ruined by the country’s worst drought in at least a half century, spurring the government to impose a grain-export ban on Aug. 15. Prime Minister Vladimir Putin said a week ago that the ban would last least at least until next year’s harvest is completed. Wheat traded in Chicago, a global benchmark, as much as doubled since June.
“If after the New Year prices go up, the government will stamp this out through its intervention fund,” Korolyov said, referring to the 9.5 million tons of stockpiles accumulated in previous years to support farmers. “The government won’t allow prices to rise.”
Russia’s grain inventories were 18 million tons on July 1, Dmitry Rylko, director of the Institute for Agricultural Market Studies, said at the conference. Abdolreza Abbassian, a senior grains economist at the United Nations’ Food and Agriculture Organization, said stockpiles were probably about 17 million tons at that date.
Government Estimate
Both estimates are below the latest government figure. The Agriculture Ministry on Sept. 7 increased its stockpile estimate to 26 million tons from 22 million tons and said imports were unnecessary. Russia may import as much as 6 million tons of grain in the current marketing year, according to Moscow-based researcher SovEcon.
Russian farmers are stockpiling grain in expectation of higher prices, Sergei Levin, head of state-run trader United Grain Co., told the conference. They may lose money if they hold on to their grain and the government starts selling from stockpiles, he said.
The export ban may spur farmers to plant less for the next harvest, said Vladimir Petrichenko , an analyst at trader WJ Group. Russia was the world’s third-biggest wheat exporter in 2009-10 after the U.S. and Canada, according to the U.S. Department of Agriculture.
The ministry said Sept. 2 Russia must produce between 85 million and 90 million tons of grain next year to ensure sufficient domestic supply.
Russian grain consumption will fall below 70 million tons, less than the government’s 77 million-ton estimate, as farmers slaughter cattle, Arkady Zlochevsky, head of the Russian Grain Union, said at the conference.
To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net; Henry Meyer at hmeyer4@bloomberg.net.
Rate These Stories
Rate this Page