MOSCOW, Dec 16 (Reuters) – Russian Agriculture Minister Nikolay Fyodorov played down concerns about low state grain stocks on Monday, which could leave the government with little ability to sway domestic grain prices in the event of a harvest failure next year.
Russia, one of the world’s key wheat exporters, uses its state grain stocks to boost the supply on the domestic market in years of poor harvests and to support prices in years of heavy crops via so called “interventions”, indirectly making grain more or less attractive for export.
Read Also
China soybean imports hit record June high on strong Brazil shipments
China’s soybean imports hit the highest level ever for the month of June, a Reuters calculation of customs data showed on Monday, driven by a surge in shipments from top supplier Brazil.
Government grain stocks tumbled during last year’s drought to 1.2 million tonnes from 4.7 million tonnes and were expected to be replenished this year. But they are so far far short of target as the prices the government offers to pay are too low to compete with the market.
“We can see that it would be good to have 5 million tonnes (of grain) in the intervention fund,” Fyodorov told a briefing in Moscow. He expects the ministry to have bought about half a million tonnes of grains by Jan. 1 after it began buying grain in November, bringing stocks to 1.7 million tonnes.
But he said the ministry currently has no plan to make any changes to the restocking programme.
Previously the ministry planned to buy up to 6 million tonnes on the domestic market this 2013/14 marketing year, which started on July 1, including up to 3 million tonnes by January.
“Interventions have fixed the situation (with domestic prices) very quickly,” Fyodorov said. “As of now, farmers are selling us between 65 to 70 percent of the volume we are ready to buy.”
The Russian government will have less than 2 million tonnes of grain in its stocks towards the end of 2013/14 if it does not make the conditions of the programme more attractive, said Dmitry Rylko, the head of Russia’s Institute for Agricultural Market Studies (IKAR).
SovEcon agriculture analysts expect the government to buy up to 2 million tonnes of grain in 2013/14, increasing the stocks to 3.2 million tonnes.
NEXT YEAR’S CROP
The minister also raised his 2014 grain crop target to 95 million tonnes from a previous target of 90 million tonnes.
The new forecast includes 55 million tonnes of wheat, up from the previous 50 million, Fyodorov said. He did not specify the reason for the upgrade.
Weather conditions so far this season have favoured winter grain plantings in Russia, enhancing the possibility of a good harvest in 2014, despite a fall in the sown area and late sowing.
The country has harvested 96.4 million tonnes of grains by bunker weight in 2013. After drying and cleaning, the 2013 grain crop will total more than 90 million tonnes, including more than 50 million tonnes of wheat, Fyodorov added.
