16 Jul 2010 17:11

Russia to remain top-5 grain exporter despite drought

MOSCOW. July 16 (Interfax) - Despite the drought plaguing certain parts of the country, Russia will remain among the five leading grain exporters this season, Vice President at the Russian Grain Union Alexander Korbut said.

"Grain export volume in the season just arrived [July 2010 to June 2011] will be less than last year's, but we'll stay among the five leaders," he told Interfax. As of July 15, crops - mainly grain - had been destroyed by drought over 9.6 of 48 million hectares.

Grain exports could drop to 17 million tonnes this season from 21.5 million tonnes the previous one, Korbut said.

"Even with the most unfavorable analyst forecasts and the recently lowered forecasts for the future harvest, the market will maintain a sufficiently large volume of grain," he said. "It will have to be removed to ensure agricultural producers are profitable, which is one of the main tasks of the Russian Grain Union."

Carry-over grain stocks weigh in at 24 million tonnes, including 9.5 million tonnes of Intervention Fund grain. Estimates for the harvest vary from 80 to 85 million tonnes. Russia requires 75 million tonnes per year, so there could develop grain resources of 104-109 million tonnes, Korbut said.

"If export dynamics keep up, it's possible to predict rather stable price growth for grain, which will support the domestic producer," he said. Home-market prices rose 200-250 rubles per tonne last week, and "deep-water" prices for grain shipped out of the port at Novorossiysk rose $16-$18 per tonne. "Competition between exporters is beginning to heat up, and agricultural producers are also benefiting, as they're able to sell grain at a higher price," he said.

Home-market price increases could pose an obstruction to exports, but will make it possible make effective use of Intervention Fund resources, Korbut said.