Russia on Tuesday cut its grain crop forecast in line with other analysts as its worst drought in 130 years dragged on but said it did not plan export curbs, even as traders said some shipments to Asia had been held up. The major wheat exporter cut its 2010 grains crop forecast to 70-75 million tonnes down from a previous forecast of less than 85 million tonnes as the drought spread to yet more regions, with no let up in sight for the coming week.
But as US wheat prices consolidated the day after Monday's run up to 22-month highs RIA Novosti quoted Deputy Agriculture Minister Alexander Belyayev as saying grain export restrictions were unnecessary, allaying some concerns of supply tightness. "At present this (export restrictions) will not be introduced," Belyayev said. "The government takes such decisions, but as of today there is no need for that." Russia introduced high grain export tariffs for several months in 2004 and 2008 to keep grain at home, and it sold grain from its stocks on the domestic market to keep prices down.
Some analysts say the country may harvest less than 70 million tonnes, which may halve the country's grain exports to 12 million tonnes. Russia earlier this year estimated it would have an exportable grain surplus of around 20 million tonnes and has not adjusted that figure since the drought took hold. On Monday, the Russian Grain Union, the industry lobby, cut its forecast for grain output to 72-78 million tonnes from its previous estimate of 81.5-85 tonnes
SHIPMENTS TO ASIA DELAYED Traders in Singapore said on Tuesday that exporters have delayed up to 200,000 tonnes of Black Sea wheat shipments to Asia, rescheduling delivery from July to August and September..
Russia is the top Black sea wheat exporter and is forecast by the International Grains Council to be world number five wheat exporter this year, down from three last year. The United States is expected to be number one in 2010/11 followed by the EU, Canada and Australia. Traders contracted Black Sea feed wheat to Asian mills at around $190 to $200 a tonne, including cost and freight, in May and June but the price has now jumped to $260 a tonne.
SovEcon agricultural analysts told Reuters on Monday traders were experiencing difficulties in finding grain, which farmers are reluctant to sell at previously agreed prices. "It appears that traders, who had actively signed supply contracts at the start of the season are now honouring them at a loss or with a minimal margin," said Andrei Sizov Jr., SovEcon's executive director. Meanwhile, Russia's state grain trader, the United Grain Co, said on Tuesday it was in talks with government agents of several countries on UGC's possible participation in state grain purchase tenders, UGC said on Tuesday.
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