Goldman Sachs flagged the risk of a fresh ban on Russian grain
exports even as the country's agriculture minister cautioned that shipments may
fall below current forecasts.
The investment bank rated "a new Russian export ban" as the "biggest
risk" to a forecast that wheat prices will underperform those of corn, which
are being spurred by fears over the impact of hot and dry weather on the US
The comments, and a caution of "further downside risks" to Russia's harvest hopes, follow Goldman's upgrade last week to forecasts for grain prices. The bank on Monday cut hopes for Chicago livestock futures, citing higher feed costs.
And they tally with lingering market concerns that Russia,
which two years ago banned wheat shipments following its worst drought on
record, will be tempted to impose fresh restrictions after dryness cut yield
prospects in many areas, with recent rains posing concerns for quality too.
On Friday, FCStone warned that "eventually [the] market will
be faced with the prospects of a Russian grain embargo", although thinking
along the lines of 2008, when Russia introduced export taxes to slow the pace
"This will be a story for January forward but can have a
huge effect on basis and spreads," FCStone added.
Separately, grain traders at a major European commodities
house, with significant Black Sea farming interests, also cautioned that "one
has to bear in my mind that grain exports from Russia do have a reputation for
unreliability for whatever reason".
They added that, with forecasts for the overall grains crop
downgraded to levels of about 80m tonnes, by commentators such as Sovecon, "there
remains uncertainty about the true size of the surplus, if any, as Russia's
domestic demand is put at 73m tonnes".
However, Russian officials have downplayed the prospect of
an export ban, if acknowledging that shipments may prove considerably smaller
than initially hoped.
Nikolai Fyodorov, the Russian agriculture minister, on
Monday said that "my experts tell me that export potential is at 18m-20m tonnes.
"But if unfavourable weather factors continue the forecast
will be in the neighbourhood of 16m-18m tonnes."
'No need for curbs'
Separately, consultancy Agritel said that Russia's wheat harvest
was sufficient to "avoid the government adopting any artificial market
regulation strategy", if forecasting a near-halving to 11.0m tonnes in Russia's
2012-13 wheat exports.
The US Department of Agriculture last week cut its forecast
to 12.0m tonnes.
Agritel also flagged Russia's entry into the World Trade
Organization, which limits the country's latitude for imposing trade restrictions.
Russia's wheat exports are closely watched as they are
considered a source of low-price supplies which keep pressure on world values.
However, the prospect of a disappointing harvest, pegged by
Agritel at 45.9m tonnes, down some 17% year on year, coupled with strong
markets has lifted prices of Russian supplies.
Sovecon said that fourth-class milling wheat, the typical
export grade, was going for 9,200-9,400 roubles a tonne in port, up 1,400
roubles in the past week.
According to Ikar, Russian wheat with 12.5% protein is
quoted at the port of Novorossiisk at $305 a tonne, up at least $10 in the past
Ikar also highlighted a soft start by Russia to its 2012-13
export year, with total grains shipments in the first week of July, the first
week of the marketing season, reaching 275,000 tonnes, compared with 340,000
tonnes in the same week of 2011.