Russia may curb grain exports after all
Russia may impose grain export curbs after all to quell a rise in domestic prices of the grain, the country’s economy minister said, as Russia’s continued success in shipments continues to erode supplies.
Andrei Belousov, Russia’s economy minister, said it was "quite possible" that the government, which two years ago banned shipments altogether after dryness devastated grains production, would restrict exports of this year’s drought-hit crop.
The comments fostered a rise in prices of wheat, Russia’s main grain export, which stood 1.6% higher at $8.93 ¾ a bushel in Chicago at 10:10 UK time (04:10 Chicago time), while gaining 0.8% in Paris and 1.2% in London.
And they appeared to put Mr Belusov on a collision course with Deputy Prime Minister Arkady Dvorkovich, who said at the end of August, after a meeting with farm ministers which eschewed trade curbs, that "we consider any export restrictions harmful.
"We will use the instruments we have – market interventions and information exchange with market participants.
"As long as I am in charge of this sector, I will be against any export restrictions."
Separately on Friday, Mr Dvorkovich said that Russia did not plan to impose export curbs.
Mr Belusov said on Friday: "The issue of [a] grain exports ban is the issue of domestic grain prices dynamics.
"We are witnessing such a trend at the moment… With such a trend, it’s quite possible, that the government will decide to restrict grain exports."
The government will discuss grain exports "this autumn".
Clashes within governments are not uncommon at times of rising grain prices, with agriculture ministers often seeking to protect the interests of farmers, for which high prices may offer compensation for a poor crop.
Meanwhile, economy ministers, attempting to keep a lid on inflation, often pursue action to depress food prices or, as in Ukraine last year, opportunities to raise revenues through export levies.
Prices of Grade 3 wheat stood at 8,450 roubles a tonne as of a week ago, up 28% on values at the start of June, before US, and then former Soviet Union, droughts sent world grain prices soaring.
The rises have been underpinned by weak inventories left over from last year’s campaign, with inventories held by farmers starting August at their lowest in nine years.
The price of Grade 4 wheat, the typical export grade, was 8,425 roubles a tonne, a gain of 30% over the same period.
However, with values of foreign grain rising too, the increases, while cutting the discount of Russian wheat exports compared with rival supplies, has not eliminated it entirely, with the country on Wednesday winning a 150,000-tonne order from Iraq against international competition.
Traders flagged the higher price of some $377 a tonne, excluding freight, that Iraq appears to have paid, compared with the values of $320-350 a tonne paid by Egypt at tenders undertaken earlier, but also for November shipment.
The Iraq price "is going to provide some very tough competition in the interior" for any merchants which have yet to source grain for Egypt, Swiss-based analysis group Fryer said.
‘Soon dry up’
Fryer analysts added, in comments made before Friday’s announcement: "We now suspect that unless there is a clear mandate from the [Russian] government that allows sales into November," implying that any curbs might not be go live until late in the year.
Even so, it may be too late for buyers to source large quantities of the grain ahead of any curbs, with logistics at Russia’s main Black Sea port already appearing tight, given the three ships bound for Iraq to load, besides 13 panamax cargos to Egypt in the October-to-November timeframe.
The fate of Russia’s exports is being closely watched given that their decline will shift demand from importers to other origins, notably European and North American supplies.
At UK grain merchant Gleadell, trading manager Jonathan Lane said: "Black Sea wheat offers will soon dry up, Southern hemisphere wheat production is forecast 10m tonnes lower than last year, and a tighter EU surplus is seen replacing declining Black Sea exports."
Statistics: Posted by yoda — Fri Sep 21, 2012 10:01 am
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Soy price to rise to curb buoyant Chinese imports
Soybean prices will "likely" set a fresh record to contain Chinese soybean imports, which data showed soaring in June, Macquarie said on Monday, even as futures tumbled.
The double whammy of drought damage to US Midwest crops, following disappointing South American harvest at the start of the year, has "set up an explosive situation" for soybean prices, the bank said.
Soybean prices, which touched records above $17.70 a bushel last week, "will likely have to rise further" to constrain demand.
This includes orders from China, the world’s largest buyer, which customs data on Monday showed importing 5.6m tonnes of the oilseed last month, the highest figure for eight months, and a rise of 31% on the figure for June last year.
‘Curtail Chinese imports’
"Any production loss that we see in the US will require prices to rise to even higher levels now in order to curtail Chinese import demand," Macquarie said.
"Prices will have to trade in the high teens [dollars per bushel] for the rest of the year for this to occur."
The bank added: "If yields fall to below 40 bushels per acre, we will have to ration a significant volume of Chinese imports through the 2012-13 season."
In fact, many analysts have already cut their forecasts for the US soybean yield below this level, with Goldman Sachs on Monday downgrading its estimate to 39.5 bushels per acre.
The US Department of Agriculture estimate is at 40.5 bushels per acre.
However, soybeans, and other agriculture commodities, suffered losses on Monday, fuelled by fears for eurozone debt, and forecasts for much-needed rain in the Midwest.
Smaller domestic harvest
Any reduction in Chinese imports would come against a backdrop of domestic production hopes weakened by a switch by growers from the oilseed to corn, which offers better returns.
Indeed, Barclays Capital said that a third successive year of smaller soybean sowings in 2012, "as farmers increase domestic corn production, bodes well for higher 2012-13 soybean imports".
Chinese corn imports were elevated too in June, reaching a five-month high of 528,600 tonnes, quadruple those of May.
However, imports of wheat, which has been favoured as a feed grain thanks to high corn prices, fell to a five-month low of 216,700 tonnes, down 61% month on month, although as BarCap noted, "the decline came from record high wheat imports in May".
China’s cotton imports, net of 5,900 in exports, also fell to a five-month low, of 470,100 tonnes, after the country wound down its programme of rebuilding state stockpiles.
Cocoa and coffee buy-ins also fell.
However, sugar imports more than trebled, year on year, to 380,100 tonnes, the highest of 2012 so far.
Statistics: Posted by yoda — Mon Jul 23, 2012 12:52 pm
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