20 Dec 2010 14:53

Russia can resume grain exports in 2011 if harvest tops 80 mln tonnes - Grain Union

MOSCOW. Dec 20 (Interfax) - Russia will only be able to resume exporting grain in 2011 if the harvest amounts to at least 80 million tonnes (bunker weight), Russian Grain Union President Arkady Zlochevsky said.

"With a minimum harvest of 80 million tonnes, exports might total 10 million-15 million tonnes. If we harvest 70 million tonnes, then there won't be any exports," Zlochevsky told journalists on Monday.

Russia's grain reserves as of the beginning of the 2011 farm year [July 1, 2011] should total 15 million tonnes, which would make it possible to resume grain imports.

"The world market remembers us and our traditional buyers - Egypt, Syria, other countries - are waiting. The whole issue is the risks represented by Russian grain. There is the risk that after we conclude contracts, we'll pull some other stunt," he said.

When it returns to the export market, Russia will have to cut prices by $5-$10 per tonne. "Previously we offered prices $1-$2 per tonne below the market. Now we'll have to cut it by $5-$10 per tonne, because importers will prefer to pay $5 more to the Americans if it avoids risk," he said.

Even if the harvest does equal 80 million tonnes, Russia will have to be careful it doesn't export too much. "With that kind of harvest, the resource will not be sufficient to export grain throughout the season, so export limits will be an issue," he said. "In order to avoid restrictions, we need an export resource of about 25 million tonnes, since in previous years our exports have totaled 20 million-22 million tonnes."

Russia tried to limit wheat exports in 2008 with an export tariff equal to 40% of the customs value but no less than 0.105 euro per kg. "But that limitation just created additional problems for the market and for grain producers," Zlochevsky said. "Therefore we need to create another, sounder mechanism that won't cause problems," he said.

Russia imposed a ban on grain exports on August 15, 2010. The ban is set to expire on July 1, 2011.