Sovecon urged caution over prospects for a rebound in Russia's
grain exports in 2013-14, despite questioning market ideas that the country may
be in for a large rebuild of fast-depleting state inventories.
Earlier on Wednesday,
Nikolai Fyodorov, the Russian agriculture minister, appeared to signal a
willingness to rebuild state grain inventories, which are expected to be left
nearly empty at the close of 2012-13 by sales into a domestic market clamouring
for supplies after last year's drought hit harvest.
"My feeling is" that the start of intervention
purchases "will be August or September", he told a meeting of the National
Grain Producers' Union.
Last month, Ilya
Shestakov, deputy farm minister, said that "if the harvest is good
next year, we will consider replenishing these [intervention] stocks", which he
saw ending the season at potentially 300,000 tonnes, after sales of some 4.5m
Prospects for intervention buying are proving particularly
sensitive given the thin levels of overall Russian supplies, and the outlook
for this year's harvest which Andrey Sizov, the Sovecon managing director,
termed "not that good" thanks to weather setbacks.
'Mechanism for market
In fact, Russia has a legal framework governing intervention
buying which means that the level of purchases - if there are any at all – "is
not at all clear yet", Mr Sizov said.
The purchases are based on a support price set at the end of
March, and historically based on the previous year's price, plus an added
"If the market goes below the threshold price, the
government will start intervention buying," Mr Sizov told Agrimoney.com.
"They do not say they want to buy a certain volume a year. Intervention
- buying when prices fall too far, and selling when they rise - is a mechanism
for market stabilisation."
Nonetheless, Mr Sizov was cautious on grain volumes which will
be left to support exports in 2013-14, saying that while it was early in the season
to be making forecasts, it appeared unlikely that they would approach last
season's record of 28m tonnes.
They were likely to be closer to this season's exports, forecast at about 15m tonnes.
The country is set to end the current season with a thin
level of overall carryover stocks, after a surge of early-season shipments
exacerbated the impact of a disappointing harvest.
And the outlook for the 2013 harvest is not promising, after
poor winter conditions left an estimated 12% of autumn-sown grains in poor
condition, a higher-than-average rate of weather damage.
While some of this area will be resown in the spring, "much
of it might go to non-grain crops", such as peas or sunflowers, Mr Sizov said.
"If you look historically, fluctuations in spring grain
acreage are very low."
Winter grain plantings had already proved disappointing, in
part thanks to autumn dryness, and in part to fears – which have turned out to
be unfounded – that the government would ban exports to protect domestic grain
supplies, so sending prices tumbling.
In fact, prices have hit record highs, although weakening a
little this month to some $385 a tonne, as measured by Central Russian food
"This price needs to drop by more than $100 a tonne for new
crop to become competitive," Mr Sizov said.
While this was a possibility, "it will take some time",
another reason to expect a slow-start to 2013-14 exports.