MOSCOW (Reuters) — Russia’s grain trade should escape Western sanctions because any move to punish the industry over Ukraine would hurt those countries that import grain via the Black Sea, Russian analytical firm SovEcon said today.
Andrey Sizov, SovEcon’s head, said he did not expect the United States and European Union to extend sanctions on Russian officials and companies to grain trading because that would anger importers.
Russia sells wheat mainly to Egypt, Turkey, Yemen and Iran.
“The possibility (of grain trade sanctions) is zero,” Sizov told a private conference of traders and producers in Moscow.
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“We do not expect such limits as they would infuriate not so much Russia … as its importers. For importers, who are not the richest countries, such limits would mean a price hike.”
Russia and Ukraine together with Kazakhstan are the main grain exporters via the Black Sea.
Washington and Brussels have threatened to ramp up sanctions on sectors of the Russian economy if Moscow interferes in a presidential election in Ukraine on Sunday, which Western countries see as crucial to resolving the country’s crisis.
The first rounds of sanctions against officials and some companies were triggered by Russia’s annexation of Ukraine’s region of Crimea, a move that has added to Russia’s potential grain exports.
SovEcon said it had raised Russia’s 2014-15 grain export forecast by two million tonnes because of additional supplies from Crimea. However, supplies will be lower than this year and tightened by a low level of market stocks, it said.
It expects Russia to export 24 million tonnes of grain in the 2014-15 marketing year, which begins on July 1, including 17.5 million tonnes of wheat.
It raised its 2014 grain crop forecast by two million tonnes to 90 million, including 50 million tonnes of wheat.
In the current 2013-14 marketing year, SovEcon expects Russia to export 25.6 million tonnes of grain, including 18.3 million tonnes of wheat.
Russia harvested 92.4 million tonnes of grain, including 52.1 million tonnes of wheat, in 2013.
Russian market stocks and government stocks will remain flat, year on year, and at a low level of 10.8 million tonnes of grain by June 30, 2015, SovEcon said.
It expects wheat stocks then to stand at 5.8 million tonnes, down from 7.3 million on June 30, 2014.
“This season will be largely regulated by market factors,” Sizov said. “The government intervention, if any, will be insignificant.”
