October 11, 2011 / 4:20 PM / 8 years ago

UPDATE 1-Russia mulls export duty to keep grain in country

(Adds more quotes, details, background, analyst comment)

* A floating tariff may be set if exports exceeds 23-24 mln T

* Russia exports 10.7 mln T of grain so far

* The tariff unlikely to be set in 2011

* Analyst supports the timely tariff plan announcement

By Aleksandras Budrys

MOSCOW, Oct 11 (Reuters) - Russia is looking at a protective export duty to keep grain in the country if exports exceed 23-24 million tonnes in the current crop year, First Deputy Prime Minister Viktor Zubkov told reporters on Tuesday.

“This year the crop is going to be 90, maybe 92 million tonnes,” Zubkov said.

“We would need 70-72 million tonnes for domestic consumption. But we also need some 15-16 million tonnes for carryover stocks by the end of the year. Therefore we can afford exports of 23-24 million tonnes in the current crop year.”

Russia had opening stocks of more than 20 million tonnes at the beginning of the year.

Moscow on July 1 lifted a ban on grain exports imposed last year during a catastrophic drought, but has signalled its preferred method of export control this year would be an export duty.

This measure was supported by the powerful grain industry lobby the Russian Grain Union.

“It will be a floating tariff,” Zubkov said without providing details. The government will prepare a draft order by Nov. 1 detailing the duty plan.

He added that the government aimed to keep domestic wheat prices in the range of 5,600-6,500 roubles ($177.70-206.30)per tonne.

Average EXW third-grade milling wheat offer prices declined in the European part of Russia by 75 roubles ($2.34) to 6,050 roubles ($188.77) per tonne last week, fourth-grade by 100 roubles to 5,900 roubles analysts have said.

Zubkov said that the tariff will not be introduced this calendar year as since the lifting of the ban on July 1 Russia has exported 10.7 million tonnes of grain and could export a total of 18-19 million tonnes until January 1.

ANALYST SUPPORTS THE PLAN

A leading Russian agricultural analyst supported the timely announcement of the plan.

“It is an absolutely reasonable measure and it has a forestalling effect,” Andrei Sizov Sr, President and CEO of SovEcon thinktank commented, adding that the announcement would permit traders to prepare for possible restrictions.

“In fact this is now seen as a hypothetical measure because currently we don’t know how much we will export. We have exported 11 million tonnes and may export another 12-13, but we don’t know what domestic and international prices will be. This measure may not be introduced if exports prove to be uncompetitive.”

He said international prices were falling and Ukraine has decided to abolish its export duties and increase exports pushing prices further down.

Russian grain exports normally decline from October-November when stormy weather sets in at its main export Black Sea ports and later when rivers freeze.

$1 = 31.513 Russian Roubles Reporting by Aleksandras Budrys

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