Volga Baikal AGRO News Update on Situation on Quota for the Export of Grain from the Russian Federation !!!

The Ministry of Agriculture plans to establish a quota for grain exports from Russia for a period from January 01, 2021 to June 30, 2021. This was announced by the Minister of Agriculture of the Russian Federation Dmitry Patrushev during the Russian agro-industrial exhibition “Golden Autumn”. “The mechanism of non-tariff quotas for grain exports remains relevant. The Ministry of Agriculture plans to apply this measure in the current and subsequent seasons, ”he said.

As previously reported, in the second half of the last agricultural year (July 01, 2019 – June 30, 2020), the Ministry of Agriculture introduced a quota for grain exports from Russia to non-EAEU countries in the amount of 7 million tons. Patrushev said in an interview with TASS that The ministry plans to make the grain export quota mechanism permanent, and noted that the parameters of the quota for the next year can be determined after the harvest.

The head of the Ministry of Agriculture explained that Russian grain is in high demand in the world, and the lack of control measures could potentially lead to its shortage in the domestic market. At the same time, the minister emphasized that for the first half of the agricultural year, such a measure is not expected.

Recall, according  to the forecast of the Ministry of Agriculture, the grain harvest in 2020 will be more than 125 million tons against 121.2 million tons in 2019. As Roman Nekrasov, Director of the Department of Crop Production, Mechanization, Chemicalization and Plant Protection of the Ministry, noted at the Golden Autumn, in 2021 it is planned to harvest more than 127.4 million tons of grain and leguminous crops, in 2024 the Ministry of Agriculture expects an increase in production to 141 million tons.

Rudolf Bulavin, head of the crop production department of the branch analysis department of the Agroanalytics Center, noted that the news that the Russian Ministry of Agriculture plans to set a grain export quota in the second half of this grain year reduces uncertainty for market operators, although it does not completely eliminate it. The next step that the market expects from the regulator will be quantitative parameters and the export procedure itself within the framework of the quota. It is not yet known whether there will be quotas for grain exports in general or for individual crops, how the quotas will be organized. The first experience of using export quotas was not without its rough edges, which, however, for the most part were quickly eliminated.

As you know, Russia is the largest supplier of wheat in the world market and one of the largest exporters of barley and corn. Russia’s decision to introduce export quotas will support global prices in the coming months, boosting demand. Amid rising COVID-19 incidence, importing countries may increase their purchases to create insurance stocks of grain, fearing possible closure of markets or disruptions in supply chains. If agrometeorological conditions deteriorate, demand will grow even more. In particular, in recent weeks, dry and hot weather in the winter wheat sowing regions in the Northern Hemisphere has become the reason for the rise in world wheat prices. Unfavorable conditions for sowing winter crops could significantly reduce the global harvest in 2021.