Russian Grain Deliveries Stopped Due to Backlog
03 September 2011
RUSSIA - Russian Railways stopped grain deliveries this week to the Black Sea port of Novorossiysk, during Russia's return to global wheat markets after it ended an export ban.
A "massive" backlog of grain wagons was clogging lines linking farmland to the port, according to the railway. Stormy weather had slowed vessels leaving Novorossiysk, adding to the back-up.
According to the Financial Times, Russian farmers have raced to move grain to the port since July, when the government lifted a ban on exports imposed after a heatwave and drought last year. Russia is expected to harvest 87m to 88m tonnes of grain this year, compared with just over 60m in 2010.
SovEcon, the Moscow-based agricultural consultancy, forecasts that Russia will export 20m tonnes of grain in the 2011-12 crop year, including 18m tonnes of wheat. Grain exports reached a near record 3m tonnes in August and are expected to continue at this level in September. "Grain exports might slow down temporarily, but this is nothing extraordinary," said Andrei Sizov Jnr, SovEcon managing director.
The return of Russia and Ukraine to global grain markets has eased tight supply. With analysts cutting estimates for US corn, wheat from the Black Sea region is expected to take up some of the slack.
European wheat prices, which fell after the Russian export ban was lifted, have been edging up again. Milling wheat for November delivery was trading at €208.50 per tonne in Paris, down 1.3 per cent on the day, after hitting a six-week high of €215.25 on Monday. In Chicago, CBOT December wheat was $7.84 a bushel, down 1 per cent.
The disruption in Novorossiysk could boost wheat shipments from the US, which reported a relatively slow 369,200 tonnes of net export sales last week.
Russia rose to be the world's third-biggest wheat supplier after the government launched agricultural reforms after 2000. However, it has struggled to develop transport and storage infrastructure.
Russian grain exports remain vulnerable to the domestic market and transport bottlenecks. While Dmitry Medvedev, the Russian president, said this week that fresh restrictions would probably not be necessary this year, several senior officials have warned exports might be curbed if domestic prices rose.
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