IKAR in Mass and Industry Media

Russia mulls rare grain imports for government stocks

Reuters

MOSCOW, Feb 7 (Reuters) - For the first time in more than two decades, the Russian government is considering importing grain this year to replenish tight state stocks, a statement from Agriculture Minister Nikolai Fyodorov showed on Thursday.

Russia's drought-hit 2012 grain crop fell by a quarter to 71 million tonnes, sending domestic prices to record highs, depleting stocks and triggering sales from strategic reserves.

Moscow has been forced to increase imports to cover domestic demand.

"We are now preparing for the next big meeting to discuss the interventions stocks' prospects ...We may buy grain not only domestically but also abroad if it is profitable," Fyodorov said in an interview published by the government daily Rossiiskaya Gazeta.

Fyodorov did not say when or how much grain Russia could buy abroad. However, the country should have no less than 10 million tonnes of grain in carryover stocks, he added.

Russia's total closing grain stocks, held by market players and the government combined, are expected to fall to 7.7 million tonnes at the end of the crop year (in June) from 19 million last year, according to official estimates.

Some traders and analysts said the idea of importing had come too late as prices in Kazakhstan, the main source of imported grain for Russia now, are too high.

"We proposed this measure during the autumn, but now it looks like a belated idea and can only trigger a global price increase," Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), told Reuters.

Since the start of this marketing year on July 1, the government has sold 1.57 million tonnes of grain, but has failed to pull down prices from record highs.

It aims to sell an additional 3 million tonnes through to the end of this marketing year and to decrease government intervention stocks to around 300,000 tonnes.

The last time the Russian government bought grain abroad for its stocks was during the season of 1991/1992, when its stocks were depleted, said Andrei Sizov, head of agriculture analysts SovEcon.

Russia, where domestic wheat prices were seen at about $390 per tonne last week, currently imports grain from Kazakhstan for market needs at about $340 per tonne.

March milling wheat on the Paris futures market was seen at about $330 a tonne on Thursday.

Imports of grain from the United States and European Union may become attractive in about two months, when Russia plans to suspend an import duty.

The government aims to suspend the five percent grain import tax until July 1, as an expected 60-percent decline in carryover stocks has created risks for the new crop year.

The duty is expected to be removed by early April after all regulatory approvals.

January-June grain imports are set to rise to 800,000 tonnes from 500,000 in July-December 2012, Fyodorov said earlier.MOSCOW, Feb 7 (Reuters) - For the first time in more than two decades, the Russian government is considering importing grain this year to replenish tight state stocks, a statement from Agriculture Minister Nikolai Fyodorov showed on Thursday.

Russia's drought-hit 2012 grain crop fell by a quarter to 71 million tonnes, sending domestic prices to record highs, depleting stocks and triggering sales from strategic reserves.

Moscow has been forced to increase imports to cover domestic demand.

"We are now preparing for the next big meeting to discuss the interventions stocks' prospects ...We may buy grain not only domestically but also abroad if it is profitable," Fyodorov said in an interview published by the government daily Rossiiskaya Gazeta.

Fyodorov did not say when or how much grain Russia could buy abroad. However, the country should have no less than 10 million tonnes of grain in carryover stocks, he added.

Russia's total closing grain stocks, held by market players and the government combined, are expected to fall to 7.7 million tonnes at the end of the crop year (in June) from 19 million last year, according to official estimates.

Some traders and analysts said the idea of importing had come too late as prices in Kazakhstan, the main source of imported grain for Russia now, are too high.

"We proposed this measure during the autumn, but now it looks like a belated idea and can only trigger a global price increase," Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), told Reuters.

Since the start of this marketing year on July 1, the government has sold 1.57 million tonnes of grain, but has failed to pull down prices from record highs.

It aims to sell an additional 3 million tonnes through to the end of this marketing year and to decrease government intervention stocks to around 300,000 tonnes.

The last time the Russian government bought grain abroad for its stocks was during the season of 1991/1992, when its stocks were depleted, said Andrei Sizov, head of agriculture analysts SovEcon.

Russia, where domestic wheat prices were seen at about $390 per tonne last week, currently imports grain from Kazakhstan for market needs at about $340 per tonne.

March milling wheat on the Paris futures market was seen at about $330 a tonne on Thursday.

Imports of grain from the United States and European Union may become attractive in about two months, when Russia plans to suspend an import duty.

The government aims to suspend the five percent grain import tax until July 1, as an expected 60-percent decline in carryover stocks has created risks for the new crop year.

The duty is expected to be removed by early April after all regulatory approvals.

January-June grain imports are set to rise to 800,000 tonnes from 500,000 in July-December 2012, Fyodorov said earlier.

07.02.13

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