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Russia to face milling wheat, rye deficit

Reuters / Russia’s miller’s union said it has asked the government to ease conditions for importing wheat from Kazakhstan and rye from Germany this spring to cover a shortage after drought slashed grain crops.

Russia, historically the world’s No. 3 global exporter, was hit by hot and dry weather this year, which slashed its wheat harvest by a third. Its exportable surplus has already been exhausted.

“It would be appropriate to think in advance about creating attractive conditions for milling wheat imports to Russia (mainly from Kazakhstan) and for rye imports from Germany, which has a good harvest this year,” the union said in a letter to Deputy Prime Minister Arkady Dvorkovich, who oversees the farm sector.

Russia has just completed its harvest, and millers are not currently experiencing a deficit. But milling wheat and rye are likely to run short this spring, the lobby said in the letter, published on its website.

It did not provide specific proposals on the easing of grain imports, nor did it specify how much grain the country might import this season.

In good harvest years, such as 2011-12, Russia imports about one million tonnes of grain a year, mainly wheat from Kazakhstan for its border regions in the Urals and Siberia, as well as some top-quality milling wheat that Russia cannot supply.

In the current 2012-13 marketing season, which started on July 1, Russia may import two million tonnes of grain, the chief executive of SovEcon agricultural analysts, Andrei Sizov, told Reuters Nov. 6.

Germany is the EU’s largest producer of rye, with a harvest of about 3.7 million tonnes in 2012 against 2.5 million tonnes in 2011, according to Farm Ministry figures.

“Exports of German rye to Russia have taken place in the past but have been tiny or non-existent in the past couple of years when Russia had a good crop. This would be excellent export news and may be another illustration of how tight Russian supplies are,” a German trader said.

Yevgeny Aman, executive secretary at Kazakhstan’s Agriculture Ministry, said Russian buyers were currently unable to compete with relatively high domestic prices for Kazakh wheat.

“Kazakh grain is not yet passable in Russia,” Aman said by telephone.

“Russia has its own volumes but these will dwindle as they are located closer to the sea and will be exported. We may get to the point where Russia, Siberian regions in particular, will feel the need for our wheat.”

According to SovEcon, Russia’s 2012-13 grain exports will reach around 12 million tonnes by the end of November, which exceeds the official estimate of 10 million tonnes for this year’s exportable grain surplus.

In an indication of how tight Russian supplies are, Russia has been conducting market interventions to cool prices but with little effect.

Traders have speculated for months that Russia may restrict exports, as it did in 2010, but Russian officials have said they will oppose any ban on grain exports.

Kazakhstan was also affected by drought this year, which slashed its grain harvest to 13 million tonnes by clean weight, but thanks to carry-over stocks the country will maintain exports at around eight million tonnes in the marketing year to June 30, 2013, the ministry has said.

Aman said Kazakhstan’s traditional export markets in Central Asia and Afghanistan would demand five million to six million tonnes of grain this season, leaving two million to three million free for export elsewhere.

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