Russia to Use Foreign Ports to Export its Grain

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Aug. 29 – Russia may have to use ports in the Ukraine and the Baltic States to export as much as 23 million metric tons (mmt) of grain if harvests continue to be strong this season, ZAO Rusagrotrans, the country’s biggest carrier of cereals by rail, said in a recent statement.

“Russia’s ports and railroad system are nearing their full capacity to handle grain destined for foreign shipment,” said Igor Pavensky, head of the market analysis department at Rusagrotrans.

Assuming continued favorable weather for grain maturing and harvesting, Russia’s grain crop forecast is set to increase by 1.5 mmt this year to 87.0 mmt, including 54 mmt of wheat, 16.5 mmt of barley, 5.0 mmt of corn, and 11.5 mmt of other grains and legumes.

On July 21, the Ministry of Agriculture increased Russia’s grain export forecast from 15 mmt to 18 mmt. Later, the ministry’s top officials reported that country might place grain exports to 20 mmt within the season of 2011.

“This season we will have a surplus of at least 27 million metric tons of grain, of which we will not be able to export more than 22 million metric tons to 23 million metric tons,” Russian Grain Union Head Arkady Zlochevsky said.

The forecasts are based on increased crop harvests. Due to Russia’s larger grain crop, ample carry-in stocks, and reduced competition from Europe in the key Mediterranean market, Foreign Agriculture Service Moscow forecasts Russian’s total grain exports at 16 mmt, including 14.0 mmt of wheat, 1.0 mmt of barley, and approximately 1.0 mmt of other grains and legumes.

In the first half of July 2011, Russia exported only 870,000 metric tons of grain (mostly wheat), including 205,200 metric tons to Turkey, and 170,000 metric tons to Egypt.

“Grain exports in the first 22 days of August seem to be not a large amount,” Pavensky said, while adding “it would be logical to expect a significantly larger amount than in the same period of July. It is necessary to use other port destinations.”

Exports of grain from Russia came to 1.9 million metric tons since the beginning of August, according to food-safety watchdog Rosselkhoznadzor, which compiles statistics on shipments. That compares with almost 2.9 million tons for all of July 2011.

Traders will have to ship grain through the ports of Odessa, Yuzhny, Ilyichevsk and Nikoalyev in Ukraine to help attain the national export potential, according to Pavensky. They also need to use Riga, Ventspils and Liepaja in Latvia and the Lithuanian port of Klaipeda, he added.

Rail deliveries to all those ports this season may come to between 2.5 million and 3 million tons of grain from central Russia’s Black Earth region and the Volga region, Pavensky said.

Russian companies resumed grain exports on July 1, 2011 after more than 10 months’ break caused by the grain export ban.

In July 2011, Russian wheat prices averaged US$246/MT FOB, more than US$30 below French and U.S. offers.

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