Putin Halts Russia's Grain Exports Long-Term
Suderman says extended ban intended to stimulate selling and ban may not last as long as officials say.
Compiled by staff
Published: Sep 7, 2010
Russia's Prime Minister Vladimir Puttin says Russia's ban on grain exports will be extended well into next year because of continued uncertainty over production. Severe drought and heat have depressed the Russian harvest. Putin told senior officials there should be no frantic movement and that he believes they must make clear that they can examine the cancellation of the ban on grain exports only after next year's harvest is gathered and there is clarity regarding grain levels.
The ban, which includes wheat, wheat flour, barley, rye and corn, was intended to last until Dec. 31. But, Putin's comments seem to be suggesting that it would go through autumn 2011. Farm Futures Market Analyst Arlan Suderman says that is to counter the response of those holding grain.
"With a limited export ban, those holding grain decide to wait until the ban was over," Suderman said. "So what Russia found was they still had runaway food inflation even with the export bans, so they needed to, at least politically, make it such a long ban that those holding grain would simply give up and sell their grain onto the market to relieve inflationary pressure."
Suderman says the ban may not be kept in place until next fall, but that is what they have said at this point in order to stimulate the selling of grain by those who hold it. Analysts estimate that this year's harvest will fall by roughly a third. Last year, Russia was the world's third largest wheat exporter, behind the United States and Canada.
In Russia, grain prices have been rising even faster than on world markets. In his remarks, Putin demanded that officials crack down on food speculators, seeking to calm a public that has grown jittery because of rising prices for meat, flour, pasta and other staples. The Kremlin is said to be concerned that discontent over prices could influence the 2012 presidential election.
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Tagged: wheat, Harvest, farm, farm futures, arlan suderman
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