Russia Extends Export Ban, Ukraine Delays Continue – for Sep. 16, 2010

Major exporter Ukraine is holding ships carrying a month’s grain supply in its ports, traders said Sept. 7, while Russia said it had enough grain to feed itself but would maintain an export ban until late 2011.

The Russian statement could bring some clarity and reassurance to a market frustrated by conflicting statements from a country that before this summer’s record heat wave and resulting drought was the world’s third-largest wheat exporter.

Ukraine’s Customs Service, reacting to lower harvests after severe weather and increased demand in the absence of Russian sales, has blocked in ports 24 vessels bound for export carrying 379,647 tonnes of grain, mostly wheat, traders’ union UZA said in a statement Sept. 7.

“According to the latest data, about 20 ships are staying in ports without official explanations. Some of the ships have been in port for more than one and half months,” UZA said.

But traders said the real volume of grain held back at ports could be much higher.

“The data provided by UZA is just a tip of the iceberg and this is just 25 per cent of the real volume. UZA counts ships of large exporters only, while there are also many ships of small traders in ports,” a large Ukrainian trader told Reuters.

The Ukrainian government last month proposed limiting exports of the two key commodities wheat and barley to 2.5 million tonnes between September and December, but has put off a final decision until October.

CLARITY

Russia on Sept. 7 sought to remove uncertainty over the fate of its grain-export plan, with the Kremlin clarifying that the embargo – introduced Aug. 15 and originally slated to end Dec. 31 – would remain in place until after next year’s harvest has been collected.

The statement fol lowed Russian President Dmitry Medvedev’s comments on Sept. 6 that the export ban might be lifted earlier than the end of this year, which appeared to contradict Prime Minister Vladimir Putin, who has said it may be extended to late 2011.

“When speaking about the possible cancellation of the ban on the export of grain, the president meant next year’s harvest,” the Kremlin spokesman told reporters.

The clarification should be welcomed by traders, who had been frustrated by a string of conflicting statements from Russia and the resulting see-saw moves in grain prices.

However the size of Russia’s grain stocks – and whether it would need to import wheat this year – remained unclear.

Agriculture Minister Yelena Skrynnik said Russia had enough grain to feed itself, revising up the carryover grain stocks estimate to 26 million tonnes from 21.7 million. This appeared to contradict Medvedev’s comments on Monday that the country would need to look for grain – which are also in line with analysts’ expectations.

The Kremlin and top economic officials have been at pains to reassure the public, already feeling the inflationary effects of the drought and worried about shortages.

“There will be enough grain for food and for the feeding of animals,” Interfax news agency quoted Skrynnik as saying.

Russia plans to harvest 60 million to 65 million tonnes of grain in 2010 compared to 97 million in 2009, and, according to official estimates needs around 77 million tonnes to meet domestic needs.

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