MOSCOW (Reuters) - Russia, one of the world’s largest wheat exporters, is considering exporting part of its 4 million tonne state grain stockpile to free up storage space before the new crop arrives, industry sources said.
Russia’s storage capacity is buckling after the country harvested a record grain crop of 121 million tonnes in 2016, with prospects for this year also looking favorable.
The agriculture ministry is seeking government permission to export up to 500,000 tonnes of grain from the stockpile, one source familiar with the matter told Reuters. The issue is currently under discussion but has not yet been agreed, another source said.
A move to sell of some of the stockpile would require permission from the government as current regulations do not allow the ministry to export grain from its own stocks, Andrey Sizov, the head of SovEcon agriculture consultancy, said.
Russia holds wheat, barley and rye in its stockpiles.
The ministry buys grain from the domestic market every year to add to its stockpile, known as the intervention fund. A year ago, tight finances and a lack of storage space slowed the ministry’s purchases.
“We are entering the new season with state stocks almost full and plans for their replenishment and finance are unclear,” Sizov said.
The agriculture ministry declined to comment. Aliya Samigullina, a spokeswoman for Deputy Prime Minister Arkady Dvorkovich, who is in charge of agriculture in the government, declined to comment.
Russia will face problems with its storage capacity if it harvests another large grain crop this year because market stocks are expected to be very high at the end of this 2016/17 marketing year on June 30, Dmitry Rylko, the head of IKAR agriculture consultancy, said.
The country has about 120 million tonnes of grain storage capacity, but only some of the facilities are capable of holding good quality grain, according to Russia’s Grain Union, a non-government farmers’ lobby group.
“There will be a problem with storage capacity in the event there is a large crop in 2017,” Arkady Zlochevsky, the head of the Union, told Reuters.
There is no overall problem now, but there are some difficulties with capacity in certain regions of Siberia and some of the old capacity needs to be modernized, a source at the agriculture ministry told Reuters.
Russia plans to increase its grain storage capacity to 130 million tonnes by 2030, according to a state program for the sector development.
Editing by Andrew Osborn and David Evans