Russia’s government will determine on Thursday how much grain can be exported during this crop year before it considers imposing a protective duty to keep grain in the country, Deputy Prime Minister Viktor Zubkov told Reuters.
"The day after tomorrow I will hold a meeting. We will decide and I will give some signals," Zubkov said in response to a question about the level of export which could trigger the duty.
Traders and analysts said last week they expected Russia’s government, which has said Russia should export no more than 23-25 million tonnes of grain during this crop year, would consider imposing export duties from April, when exports are likely to hit that level.
Russia has been a bullish factor on world wheat markets in the last week, first because of speculation that the duty would be imposed to limit exports, then because of hard frosts which caused concern about Black Sea exporters’ crops.
Chicago wheat rose to a four-week peak on Tuesday, boosted by talk of Russian export restrictions. Industry watchers said on Tuesday, however, that Russia has more grain available for export than expected after a harvest of nearly 94 million tonnes which beat earlier forecasts, suggesting the government could allow more exports than it had indicated earlier.
SovEcon analysts, who had forecast an exportable surplus of 24.5 million tonnes, said on Tuesday, however, that it was larger than expected.
"Export is proceeding at a higher pace and export restrictions could enter force more quickly than expected in the autumn," SovEcon analysts wrote.
"At the same time, the exportable surplus of grain in 2011-12, by SovEcon’s estimate, could be increased by at least two million tonnes, which could extend the period of export activity without triggering any restrictions."
The head of a large industry lobby, the Grains Union, said Russia formally had an exportable surplus of as much as 33 million tonnes, but prices would be a limiting factor on exports.
"If no duty is introduced, I think we’ll call a halt at about 27-28 million tonnes," Zlochevsky told reporters on the sidelines of a conference held by the Institute for Agricultural Markets Research (IKAR).
"Lack of clarity"
Earlier in the day, Deputy Agriculture Minister Ilya Shestakov declined to comment on the government’s target. He said the final decision would depend on the export outlook for February, which would be clear by mid-month.
"We are constantly monitoring export volumes. The decision will be made in advance," Shestakov told Reuters. "There are quite a few precursors for introduction of a duty."
Shestakov said assumptions that the duty could be introduced from April were "groundless."
Zlochevsky said the government was discussing a levy from April onward, according to plans now under discussion by the Russian government.
The Grains Union had approached Prime Minister Vladimir Putin before the new year to ask that the government abandon consideration of the duty, he added.
Putin’s government raised the possibility of a duty as its preferred method of controlling exports before it lifted a ban on exports imposed to protect domestic supplies after a catastrophic drought in the summer of 2010.
"If no duty is introduced, I think we’ll call a halt at about 27-28 million tonnes," Zlochevsky told reporters at the conference, adding that domestic prices would become a limiting factor on exports.
Prices for Russian export wheat jumped as much as $6 per tonne (all figures US$) last week as traders confronted bare elevators in Russia’s southern export regions and hesitated to buy grain inland for export, fearing export duties.
"On one hand, this is forcing the hand of some exporters, who must buy grain to fulfil previously agreed contracts before possible export limitations come into effect. Grain deliveries from distant regions where it is in surplus… given the problems with rail freight, could be too late," SovEcon wrote.
"On the other hand, the lack of clarity on the possible date when export restrictions could be introduced is discouraging exporters from signing new contracts for April and later dates, which is facilitating a rise in world prices for that period."