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Louis Dreyfus to More Than Double Russian Grain-Storage Capacity

April 19 (Bloomberg) -- Louis Dreyfus Holding BV, a Dutch commodities trader, will more than double grain-storage capacity in Russia in the next four years as weather changes affect the local harvest.

Silo capacity will expand to 4 million metric tons from 1.4 million tons, Chairwoman Margarita Louis-Dreyfus said in an interview at a forum in Moscow.

The trader is increasing storage in Russia, which suffered its worst drought in at least half a century in 2010 and another in 2012 that seared a quarter of the crop. The country is largely dependent on the weather to boost yields as it lacks the technologies of more developed grain-producing nations.

Louis Dreyfus, which runs 12 silos in Russia and is one of the largest wheat traders locally, doesn’t plan to expand into grain production in the country, according to its chairwoman. The Amsterdam-based company has some “small” grain-growing units internationally, mainly to “test the market,” she said.

The global wheat harvest this year may climb 4.3 percent from the previous season, reaching the second-highest on record, as yields rebound in Russia and European farmers expand acreage, the United Nations said in March. Wheat, the best-performing commodity in 2012 in the Standard & Poor’s GSCI gauge of 24 raw materials, is down about 10 percent this year.

Overcapacity may lead to “pretty low” global agriculture prices in the new season, Louis-Dreyfus said yesterday.

Global Trading

Louis Dreyfus Commodities is present in more than 90 countries, with Europe and the Black Sea region remaining the largest trading hub. It processes and transports about 70 million tons of food a year, according to its website, some of which is channeled through so-called food-security programs.

The company doesn’t exclude the possibility of participating in such a program in Egypt, the world’s biggest wheat importer, according to Louis-Dreyfus, who said there are no talks on such an arrangement yet.

Egypt has cut wheat imports for its subsidized bread program by 35 percent in the 12 months through June as the government struggles to raise funds, the U.S. Department of Agriculture has estimated. President Mohamed Mursi is scheduled to meet his Russian counterpart Vladimir Putin in Sochi today.

To contact the reporter on this story: Marina Sysoyeva in Moscow at msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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