Russia’s embargo on grain exports is due to expire on July 1, but traders on international markets think Moscow will likely play it safe and wait until end-September for a full lifting of the ban.
However, if crops develop well it may release some wheat in July to relieve hefty stocks in its south.
Any reopening of the gates would be bearish for grain prices, although the drop could be softened by rising concerns about deteriorating harvests in other key producers including Europe and the United States.
Russia, the world’s former third-largest wheat exporter, halted grain exports from mid-August last year after the worst drought in over a century which devastated crops.
Speculation has mounted on whether Moscow will stick to its July date after government members hinted they may extend the ban.
Most European and U.S. traders said they believed Moscow would wait until end-September or October. Moscow will remember that last year’s crops were ravaged in July, after the ban’s expiry date.
“Keeping in mind the lessons of the previous season the government will try to buy some time and wait until some preliminary crop reports,” an international trader specialized in the Black Sea region said.
A parliamentary election in December and a presidential one in March 2012 would also play a role. The government may want to avoid measures that would boost food prices but at the same time gain the votes of farmers who saw their revenues plunge.
Russian wheat prices are around a third below international ones and should jump when the export gates open.
Prime Minister Vladimir Putin on May 6 said “crop results must convince us that we fully satisfy our internal necessities and build up reserves necessary for the country” before restarting grain exports.
Meetings scheduled at the end of May could give leads on what may happen in the months to come.
Russia forecast it will produce 85 million to 90 million tonnes of grain this year, up 50 per cent on the drought-hit 2010 output reduced to 61 million tonnes, but still down on the 97 million tonnes of grain in 2009 and 108 million in 2008.
Based on sowings and the weather so far, operators estimate it will produce around 50 million to 55 million tonnes of wheat this year. Operators’ export estimates for 2011-12 range from six to 11 million tonnes, up from less than four million in 2010-11 but likely lower than the previous seasons.