Russia considers grain export restriction to maintain domestic prices down
Russia, the fifth largest producer of wheat in the world, despite the announcement made in August 2012, is expected to impose limitation on overseas shipments as of October this year.
In August 2012 the Agriculture Minister of Russia announced that Russia has no reason to ban export even if its exportable surplus is depleted. However, according to the latest report, if a domestic price of wheat continues its increasing after a severe drought, government will be compelled to constrain export.
The issue of export restriction is due to an expected increase of domestic grain prices. It is estimated that by the end of 2012 domestic prices for Russian wheat may increase to 9,000 roubles (US$290) per tonne from the current 8,000 roubles. Therefore, with such estimation it is quite possible imposition of export constraint by Russia’s government.
The government is expecting this year’s grain harvest between 72 million and 73 million tons, below the last year’s 94.2 million tons.
Russian Federation Wheat Exports by Year
|
Market Year |
Exports |
Unit of Measure |
Growth Rate |
|
2000 |
696 |
(1000 MT) |
34.36 % |
|
2001 |
4372 |
(1000 MT) |
528.16 % |
|
2002 |
12621 |
(1000 MT) |
188.68 % |
|
2003 |
3114 |
(1000 MT) |
-75.33 % |
|
2004 |
7951 |
(1000 MT) |
155.33 % |
|
2005 |
10664 |
(1000 MT) |
34.12 % |
|
2006 |
10790 |
(1000 MT) |
1.18 % |
|
2007 |
12552 |
(1000 MT) |
16.33 % |
|
2008 |
18393 |
(1000 MT) |
46.53 % |
|
2009 |
18556 |
(1000 MT) |
0.89 % |
|
2010 |
3983 |
(1000 MT) |
-78.54 % |
|
2011 |
21627 |
(1000 MT) |
442.98 % |
|
2012 |
8000 |
(1000 MT) |
-63.01 % |
Source: United States Department of Agriculture
See at “http://www.indexmundi.com/agriculture/country=ru&commodity=wheat&graph=exports”
Because of Russia’s a one-year export ban 2010, when drought destroyed that year’s harvest, markets are quite familiar with such kind of Russia’s policy. Thus, future markets are already expecting a significant increase in wheat prices because if, indeed, Russia imposes any export restrictions, it may push up prices worldwide as it was in 2010.
Wheat Production by Country in 1000 MT, Year of Estimate: 2012
|
Rank |
Country | Production (1000 MT) | |
|
1 |
EU-27 |
132,370.00 |
|
|
2 |
China |
118,000.00 |
|
|
3 |
India |
93,900.00 |
|
|
4 |
United States |
61,732.00 |
|
|
5 |
Russian Federation |
39,000.00 |
|
|
6 |
Canada |
27,000.00 |
|
|
7 |
Australia |
26,000.00 |
|
|
8 |
Pakistan |
23,000.00 |
|
|
9 |
Turkey |
15,750.00 |
|
|
10 |
Ukraine |
15,500.00 |
|
See at “http://www.indexmundi.com/agriculture/?commodity=wheat&graph=production”
References:
Internet sources:
http://rt.com/business/news/russia-grain-export-limitation-643/
http://in.reuters.com/article/2012/09/21/markets-grains-idINL1E8KL6LV20120921