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Russia sets grain export quota, to sell bulk of stockpile amid coronavirus

The Russian government has approved an agriculture ministry proposal to limit grain exports to 7 million tonnes from April through June amid the coronavirus outbreak, it said in an order.

The quota is unlikely to have a strong market impact as 7 million tonnes is roughly what Russia was expected to export in the period, traders said.

Russia, the world’s largest wheat exporter, also said on Thursday that it would sell up to 83% of grain from its state stockpile into the domestic market, starting on April 13, aiming to increase supply for flour millers and bakers.

The customs union of Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan also decided this week to restrict exports of sunflower seeds, rye and soybeans until June 30. The decision was officially published on Thursday and will come into force on April 12.

Even with all these measures, Russia has so far refrained from using tough grain export curbs seen in past crises, which are unpopular with sellers, but wants to ease the pressure for domestic consumers amid a weakening rouble.

The agriculture ministry, which has 1.8 million tonnes of grain in its stockpile, had previously planned to sell 1 million tonnes from it.

“In total, it is planned to send up to 1.5 million tonnes of grain to the domestic market to meet the needs of the flour and bakery industry, as well as the livestock industry,” the ministry said in a statement.

Market players said the stockpile sale was not being seen as a step towards tightened export quotas, as the state stockpile consists of quite old grain, which the agriculture ministry bought in 2008-2016, located mainly in Siberia, far from Russia’s main export ports on the Black Sea.

Russia used to put great emphasis on having a far larger stockpile, but reduced it in recent years as its annual production became more stable.

The Russian union of flour millers last week asked the ministry “to take measures to eliminate the imbalance in the formation of prices for wheat and flour”.

“The increase in sales from the stockpiles seems to be an attempt to relieve tension and, above all, to restrain the prices for flour and bakery products,” said Alexander Korbut, deputy head of the Russian Grain Union, a non-government farmers’ lobby group.

The move is unlikely to be a step towards tougher grain export restrictions, he added.
Source: Reuters (Reporting by Polina Devitt; additional reporting by Anastasia Lyrchikova; editing by Mark Potter and Ed Osmond)

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