Russian traders fear resumed export restrictions

Prices for Russian export wheat jumped again last week as traders confronted bare elevators in Russia’s southern export regions and hesitated to buy grain inland for export, fearing export duties could be imposed and stop it leaving Russia.

Traders and analysts believe Russia’s government, which has said Russia should export no more than 23 million to 25 million tonnes of grain during this crop year, could consider imposing protective duties from April, when exports are likely to hit that level.

Exports for the 2011-12 crop year were expected to hit 20 million tonnes by the end of January.

“The market is actively discussing the possibility that export restrictions could be imposed, starting from April, linking them with the record pace,” SovEcon analysts wrote.

“There have been no official comments on this topic. We do not exclude that they could appear in the near future.”

In Russia’s main deepwater export ports on the Black Sea, prices for wheat with 11.5 per cent protein content rose to $265 per tonne from $259 per tonne, while wheat with 12.5 per cent protein content rose to $271 from $265, the Institute for Agricultural Market Studies (IKAR) said.

Prices for grain delivered to port were heard in the region of $260 to $270, an increase of as much as $10 from the previous week.

“Some exporters are at perpetual short-covering,” IKAR said.

Traders were reluctant to offer wheat for April lifting for fear of falling foul of a possible duty regime, mooted as a possible means of preserving domestic supply before Russia lifted an export ban on July 1, 2011.

The ban had been imposed in August 2010 to combat potential shortages after a catastrophic drought.

“That is why there are almost no export contracts fixing for April, and consequently, there are no relevant originations in deep continental Russia regions, such as Urals and Western Siberia.”

Overall stock levels, excluding those at small farms, stood at 42.5 million tonnes, up 13 per cent, reflecting a resurgence in agricultural production, State Statistics Service (Rosstat) data obtained by Reuters showed.

But in the Southern Federal District, a main producing and exporting region which was comparatively unhurt by the drought and ended the 2010-2011 crop year with its elevators overflowing, stocks were down 17 per cent at 7.6 million tonnes.

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