Russia & EU: Russian grain exporters face more EU competition

Russia's grain exporters are expected to encounter increased competition from producers in the European Union, which could have a negative impact on Russian exports in the 2005-06 marketing year (July-June), the domestic analyst Sovecon said Wednesday, July 6, according to Prime-Tass Business Newswire .

'In contrast to previous years, the E.U. is starting to subsidize grain exports from the start of the season. This means that the E.U. is indicating its adherence to a policy of aggressive exports even before getting the results of this year's harvest,' Sovecon said in a report.

As a result, the E.U. is expected to raise exports by 3 million tonnes of wheat and 600,000 tonnes of barley, mainly to the Mediterranean markets, which are key for Russian suppliers. No overall figures were provided.

E.U. exports are expected to increase due to higher carryover stocks of wheat, which are currently estimated at the record-high level of 157.3 million tonnes, or 3 million tonnes more than a year ago.

Sovecon downplayed reports about drought in Spain and Portugal, saying that Russian exporters are unlikely to fill this gap, as supplies to these countries are more likely to be made from the E.U. intervention stocks.

Russia's grain exports are estimated at around 8.3 million tonnes in 2004-05 and were previously seen rising to 10 million-12 million tonnes in 2005-06.

06 July, 2005