Russia delays grain export decision - again

Russia has, again, delayed an announcement to clarify its grain exports policy, even as uncertainty over curbs appears to be stemming the tide of buying which has sparked fears of depleted supplies.

Viktor Zubkov, Russian deputy prime minister, will not after all reveal later the government's thinking on grain exports, after a meeting scheduled for Friday was postponed.

The delay represents the second, after an initial date Mr Zubkov set for a statement, on Thursday, passed without an announcement.

The meeting had been widely expected to lift from 23m-25m tonnes a ceiling at which Moscow will impose export curbs.

"It seems recent meetings with government officials in Russia will likely yield a new target, probably in the neighbourhood of 27m tonnes, on total grain exports," Brian Henry, at US broker Benson Quinn Commodities, said.

Too fast for comfort

The strong pace of 2011-12 exports - which were expected to end January, the season's seventh month, at about 20m tonnes - has left them potentially on course to run into the ceiling as early as next month.

While a boon for Russia's growers and merchants, the extent of the grain exports, which are prized for their competitiveness, has rung alarm bells in government over a squeeze in supplies which would send prices soaring – so fuelling food inflation and raising costs for livestock producers.

Russia is attempting to boost its domestic protein industry to reduce a reliance on imports. The country was, until 2010, the top buyer of broiler meat, and remains the biggest beef buyer and second-ranked pork importer.

'Buyers hesitant'

However, foreign interest in Russian grain was already seen waning as farm silos near the main ports ran dry, leaving merchants to scout further afield for supplies, and brave long-distance transport the country's creaking rail network.

"With the Russians becoming less of a price driver in recent weeks the actual effect [a decision on curbs] will have on world markets outside of sentiment is fairly limited," UK traders at a major commodities house, with significant Black Sea interests, said.

Furthermore, many buyers are wary of being left in the lurch by Russian restrictions, as they were last season, when severe drought prompted Moscow, at a few days' notice, to ban grain shipments altogether.

Traders have "become hesitant about buying grain, fearing export duties", Gleadell, the UK grain merchant owned by European grain giants Toepfer International and InVivo, said.

Wagon shortage

The extent of the rail squeeze in the former Soviet Union was highlighted in a separate statement from Ukraine's State Railway Authority, which said it had banned grain wagons from leaving the country to protect its rolling stock availability.

The move, which effectively stops Ukraine's crop exports by rail, comes amid a long-standing quest by land-locked Kazakhstan for more wagons and better use of the Russian and Ukraine rail networks it needs to reach Black Sea ports.

"The country's export rate is actually limited by the number of its rail cars and the willingness of Russia to lend some more," Agritel, the consultancy, said.

In the markets, wheat for March rose 0.9% to $6.68 ѕ a bushel in Chicago, as of 12:30 GMT, and by 0.5% to E210.50 a tonne in Paris.

London wheat for May was 0.7% higher at Ј168.10 a tonne.


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