Waiver of export duties on Russian grain would prompt price crash on global, domestic markets - Grain Exporters Union

MOSCOW. Aug 17 (Interfax) - The waiver of export duties on Russian grain will lead to a serious collapse of prices on the world and domestic markets. The reason for the current price drop is not in export regulation, but in the behavior of agricultural producers themselves, who are holding on to grain, Union of Grain Exporters chief Eduard Zernin said in a statement in the union's Telegram channel.

"The Union of Grain Exporters has repeatedly warned of the danger of a price collapse in the domestic market closer to autumn at the beginning of the season. The reasons are definitely not in the policy of export regulation, but in irrational behavior of many agricultural producers, who held off on the sale of grain amid record carry-over stocks and forecasts for a record harvest in the new season," Zernin said.

"As we might have initially assumed, no miracle happened, the pressure of the new harvest grain volume has a negative impact on prices. The problem is exacerbated by the excessive supply of feed quality grain, which is suitable for fodder, but not for purchase by flour makers or the intervention fund," the union head said. "Farmers are not learning from their mistakes and continue holding back sales of food-grade grain," he said.

As for foreign markets, amid conditions of hidden sanctions significantly restricting our export opportunities, as well as short selling on the exchange market, the lifting of export restrictions will lead to a collapse of world prices catastrophic for the Russian agricultural sector, followed by the collapse of prices in the domestic market," Zernin said. "Everybody has witnessed the prices going down just on the news of the revision of the export duty calculation formula. Price dampening limits the growth of prices, but not their fall," he said.

As reported, the presidium of Russia's AKKOR association of farmers and agricultural cooperatives has decided to appeal to President Vladimir Putin to lift the export duty on grain. "With the aim of maintaining the targeted rates of production growth, we ask you to facilitate the launch of large-scale intervention trading, as well as the lifting of the export duty on grain crops," the appeal, citing in an AKKOR press release, said.