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Russia Steps Up New Crop Wheat Exports

moscow/reuters

Russia s powerful grain lobby, the Russian Grain Union, raised its forecast for the country s exports on a better- than-expected crop, but warned that prices may fall towards the end of the year due to competition from other Black Sea states.

The lobby now estimates Russia s grain exports in the current 2011-12 crop year at 25 million tonnes, up from the previous estimate of 23 million tonnes. The country expects to have an exportable surplus of 30 million tonnes, but faces stiff competition from Kazakhstan.

Russia was hit by a severe drought last year and banned grain exports. The ban was lifted in July.

An official said Russia is conquering new markets in Southeast Asia, including Indonesia, Thailand and some other states seeking higher-quality wheat with 12.5 per cent protein content.

Russia may harvest a grain crop of 93 million tonnes, above the officially expected 90 million tonnes. Either is a significant rise from the 61 million tonnes in drought-hit 2010, but still below the 97 million tonnes reaped in 2009.

Strong competition from Kazakhstan and Ukraine may push the f.o.b. Black Sea price of wheat with 11.5 per cent protein content to below $220 per tonne. The FOB wheat price has declined to $255 per tonne from $270 and could drop further if Ukraine steps up its exports. Ukraine s exports are slow due to the existence of non-cancelled export tariffs. It s estimated Ukraine s expor table grain surplus is 24 million tonnes, and Kazakhstan s at 14 million tonnes.

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