Farmers have sown 10% more acres and stockpiles exceed 6 million tonne, first deputy Prime minister Viktor Zubkov said, according to a government statement. Russian grain traders accelerated purchases in the last several weeks, moving supply to silos near ports in anticipation of the end of the ban which began in August, agricultural researcher SovEcon said May 20.
Wheat traded in Chicago, a global benchmark, as much as doubled in the past year as drought and flooding from Canada, Russia and Europe ruined crops. Russias export ban, combined with quotas on shipments imposed by Ukraine, tightened supply and contributed to global food prices tracked by the United Nations surging to a record in the first quarter. While extra shipments will help ease supply concerns, extreme weather may curb output elsewhere and keep prices high.
The complicated weather and crop situation around the world means we shouldnt expect a significant price drop, Dmitry Rylko, general director of the institute for agricultural market studies in Moscow, said on Saturday. It may also take some time for exports to resume after the ban is lifted and I dont expect record-high exports from Russia in July, he said.
Wheat for July delivery rose 0.6% to $8.1975 a bushel on the Chicago board of trade on May 27, while maize for delivery in the same month jumped 1.7% to $7.585 a bushel. Rain is delaying planting in the US Great Plains and Canadian prairies. About 45% of the US winter wheat crop was in very poor or poor condition, the US Department of Agriculture said May 23.
By contrast, Russias Agriculture Ministry estimates the total grain harvest may be 85 million to 90 million tonne, up from 60.9 million tonne last year.
Russia will export 10 million tonne of wheat in the 12 months ending in June next year, up from 4 million tonne in the current year, according to the USDA. Thats still less than the 18.6 million tonne sold a year earlier. Corn shipments will jump to 1 million tonne from 25,000 tonne and barley cargoes to 800,000 tonne from 300,000 tonne, the USDA estimates.
Russia has about 4 million tonne of wheat available for export in the south of the country, though as much as half of it may not be of good enough quality to ship, said Alexander Korbut, vice president of Russias grain union, the largest lobby group for cereal exporters. Russian ports can handle as much as 3.5 million tonne a month, he said.
The resumption of exports may drive international wheat prices 5% to 7% lower, while boosting domestic prices 15% to 20%, Korbut said. Ukraine President Viktor Yanukovych said in an interview that he would lift export quotas because of forecasts for a 15%.
While international prices may decline on the resumption of Russian exports, domestic prices will likely jump, SovEcon managing director Andrey Sizov Jr. said on Saturday. It may spur the government to restrict sales again in the year, he said.
The jump in world food prices means inflation is increasing , spurring at least two dozen central banks and the European Central Bank to raise interest rates this year, data compiled by Bloomberg show. Higher interest rates may curb global economic growth the Organization for economic cooperation and development said on May 25 and would rise to 4.6%next year from 4.2% this year.