Russia: Russia’s decision not to ban grain exports feeding through into raised prospects for 2013 crop

Russia's decision to remain open to grain exports, despite a poor harvest, is feeding through into raised prospects for the 2013 crop, besides meaning the country may yet have some more supplies to ship this season, Agrimoney.com reported on October, 29.

Russian farmers are not just raising sowings of winter crops - to some 16.8 mln hectares from a little over 16 mln hectares last year – but spending more on the crop too, analysis group SovEcon said.

"They can invest more in agricultural inputs such as seed and fertilizer," Andrey Sizov, the SovEcon managing director, said, adding that conditions had been broadly favourable too.

The willingness to invest reflects the greater returns that growers are receiving as Russia's decision – contrary to the belief of many observers - to stick by its word and remain open for exports keeps domestic prices exposed to the elevated international market.

The country has ambitions to export some 40 mln – 50 mln tonnes of grain by 2020, but this has looked an unattainable target given the country's willingness to import export restrictions and limit the returns to growers needed to fund investment.

"Farmers are spending more because of record domestic prices," Mr Sizov said.

"The last two years have been quite bad for them financially.

"Two years ago, Russia had not such high exports because of the export ban. Last year was a good crop, but prices were lower.

"This year, prices are higher because there is no ban."

Indeed, Russian officials have improved their international standing "because all the time they said there would be no ban, and there was no ban", despite doubts among many in the trade.

The situation contrasts with that in Ukraine, where farmers will likely reduce winter plantings, because of the uncertainty sown by official statements on curbs, culminating last week in the country's farm minister confirming a ban while the prime minister's office denied a decision had been made.

Russia's open stance, which contrasts with a history of imposing export curbs to protect domestic supplies, will enable shipments to continue at a reasonable level over the next two months before falling to levels of perhaps 100,000 tonnes a month for the latter months of 2012-13.

SovEcon estimated Russian shipments at 1.2 mln - 1.5 mln tonnes next month, down from 2.4 mln - 2.5 mln tonnes this month and 3.27 mln tonnes in September, but still a respectable figure from a historical perspective.

Grain exports for the first half of 2012-13, until the end of November, will reach some 12 mln tonnes, 2 mln tonnes more than the official estimate for the season's exportable surplus.

Russia is propping up domestic supplies, and keeping prices somewhat in check, by releasing grain from state reserves.

02 November, 2012