16:45 UK, 12th July 2010, by Agrimoney.com
Russia heat ruins grain area the size of Portugal

Hot weather has frazzled an area of Russian grain sowings the size of Portugal – but the country still on track to maintain exports near last year's levels, the Russian Grain Union industry group believe.

Arkady Zlochevsky, the union's president, said that 9m hectares of grain, out of 48m hectares sown, had been lost to the dry and hot weather which has become an international concern, helping revive grain prices worldwide.

Nonetheless, the country was set to keep exports at 20m tonnes "under any circumstances", with supplies boosted by record inventories of 24m tonnes carried over from last year.

Indeed, Russia would end 2010-11 with stocks of a robust 12m tonnes.

"We will have resources to cover all our needs," he said.

Inventory questions 

The comments come amid considerable debate over the degree of exports Russia will actually be able to deploy, even if the harvest comes in at the government's current estimate of 85m tonnes, a level above that of many private analysts.

Russian Grain Union wheat maths

Carry-in stocks: 24m tonnes

Production: 85m tonnes

Total supplies: 109m tonnes

Domestic consumption: 77m tonnes

Exports: 20m tonnes

Implies year-end stocks of: 12m tonnes

Even if inventories are as high as the Russian Grain Union says, some traders have question their quality, and others have pointed to the fact that much of the stockpile is owned by the state, which bought it two years ago during the spike in food commodity markets, and may be unwilling to accept a loss on its sale at lower prices.

Mr Zlochevsky, acknowledging fears raised by analysts at SovEcon last week of a Russian shortage of barley, said that the government was planning to release feed grain from government stocks to help livestock farmers, amid a national drive for self sufficiency in meat.

'Another calculation'

Mr Zlochevsky added that he agreed with the government's forecast of an 85m-tonne grain harvest, including 55m-58m tonnes of wheat, but said that there could be more losses if drought persisted.

Yelena Skrynnik, Russia's farm minister, on Monday said that the official crop forecast could be revised downwards, saying that "we have to make another calculation".

SovEcon on Friday said that the crop could come in as low as 77m tonnes, down 20m tonnes year on year.



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