Russia determined to boost grain export capacity by 50 percent

A driver unloads a truck during harvest in the Stavropol region of Russia, last year. The government wants to invest in infrastructure to increase export capacity.  |  REUTERS/Eduard Korniyenko photo

MOSCOW — Russia, which has shattered wheat harvest records three years running and is expanding production of other crops as well, aims to increase its grain export capacity by 50 percent to 7.5 million tonnes a month within three years.

And its importance on world wheat markets is reflected in the CME Group’s announcement Nov. 13 that it would launch new cash-settled Black Sea wheat and corn futures on Dec. 18. An existing Black Sea wheat futures contract based physical delivery has struggled to gain traction.

Russia’s grain exports are expected to hit a record 45 million tonnes this 2017-18 marketing year, which started on July 1, but limited infrastructure has put a brake on further expansion, analysts have said.

“We are not satisfied with the existing amount of grain transhipment,” agriculture Deputy Minister Dzhambulat Khatuov told an conference in Moscow last week, adding that there are several projects in progress to boost capacity.

Speaking to reporters on the sidelines of the conference, he said that several investment projects in Russia’s Black Sea port of Taman and in Russia’s far east and northern regions would allow it to increase export capacity to 7.5 million tonnes of grain a month from less than five million tonnes now.

Russia, a major grain importer in the later communist era, has achieved a ninefold increase in grain export capacity over the past 15 years to about 45 million tonnes. With bumper production this year it would be able to export perhaps as much as 55 million tonnes if there was no limit on port and rail capacity.

Russia’s grain exports are up 23 percent so far this marketing year, Khatuov added.

Key destinations for Russian wheat are now the Middle East and North Africa but the government also wants to expand grain exports to Asia and Latin America.

In particular, Russia wants to start commercial exports to Venezuela in addition to the previously signed intergovernmental deal, Olga Garshina, the head of the ministry’s international cooperation department, told the conference.

Egypt and Turkey are currently the largest buyers of Russian wheat, but trade relations with the latter have been strained for several months because Russia has not fully restored imports of tomatoes from Turkey. Russia recently agreed to resume limited tomato imports in line with quotas set by the agriculture ministry.

Russia is also in talks about a potential decrease in Morocco’s wheat import duty.

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