Russia to Keep Grain Export Ban


Following a bold move by Russia to place a ban on all wheat exports effective August 15, 2010 and going through the rest of the year, wheat markets moved upward quickly.  Countries dependant on the product asked that it be dropped and while it seemed as though that could be a possibility, this story from Reuters states that won’t be the case:

Russia to Keep Grain Export Ban 

Ban to Stay Unchanged From Aug. 15 to Dec. 31

A ban on Russian grain exports, designed to restrain domestic food prices because of a severe drought, will not be lifted earlier than its Dec. 31 expiry, First Deputy Prime Minister Viktor Zubkov said on Friday.

This is the latest twist in the ban saga, which started after the Russian unit of commodities trader Glencore asked the government to impose a ban for 4-6 weeks from September.

But the government imposed it from Aug. 15 to Dec. 31.

Then the Russian Grain Union, the industry lobby, asked the government last week to postpone setting the ban to September so that Russian traders could fulfil the existing contracts.

But President Dmitry Medvedev said on Thursday the ban could be lifted before its planned Dec. 31 expiry, depending on the harvest, although Prime Minister Vladimir Putin has said it could last into 2011.

“The decision to impose a temporary grain exports ban has been taken. It will be in effect from Aug. 15 to Dec. 31. There will be no changes,” Zubkov told reporters.

Zubkov said that Russian businessmen should not count on changes but start moving grain to regions which because of the drought have a shortage of both milling and feed grain.

He said the number of regions which had declared a state of emergency due to the drought had risen to 29 from 27 a week ago.


Zubkov asked the holders of grain stocks not to raise grain prices or else the government would start selling grain from its stocks. He did not say when the sales could start.

The Russian state grain trader, the United Grain Co, said in a separate statement on Friday that Medvedev had ordered the government to channel the funds meant for export subsidies to UGC to pay for the government stock storage. It did not say how much money it would receive, but the Russian Grain Union said it sought 10 billion roubles for export subsidies.

The government has 9.5 million tonnes of grain in its stocks.

Zubkov also said the drought may cut the area to be sown with winter grains for the 2011 crop by one third to 12 million hectares, citing the Agriculture Ministry’s pessimistic forecast.

“Therefore, six million hectares will have to be sown with spring grains,” Zubkov told reporters after a government commission meeting on drought.

Sowing the area meant for winter grain with spring grain may result in a lower than average crop. Winter grains, mainly winter wheat, account for around 40 percent of the total Russian grain crop and its yields are bigger than those of spring grain.

Russia expects to harvest 60-65 million tonnes of grain this year after two bumper crops of 97 million tonnes in 2009 and 108 million in 2008.


Source:  Reuters

Posted by Haylie Shipp


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