Russia grain output to surpass drought-hit level

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MOSCOW, Mar 31 (Commodity Online): Russia's grain harvest is expected to recover strongly from last year's drought-hit levels, rising 23m tonnes or 38 per cent, to 84 million tonnes, the USDA said. In a report, the USDA's Moscow office however said country's grain exports for next fiscal year is not expected to rise anyway near the target although it recovered from last year's drought-hit levels. This figure is in line with the downgraded 84m-85m tonne estimate released by Russia's deputy prime minister, Viktor Zubkov, two weeks ago, and with forecasts from the Russian Grain Union, but towards the top of the range projected by influential analysis group SovEcon. However, exports will rise only 1 million tonnes above the 4.5 million tonnes expected for 2010-11, grain largely shipped before the ban was imposed in August, but including some flour trade on which curbs were lifted in January. Such a figure would be well below levels recorded since Russia began over the last decade ramping up as a force in grain, with exports reaching 21.4 million tonnes in 2009-10. And the attaches warned of the direction of political winds on the forecast, with Russia's parliament, the Duma, facing elections this year, with presidential poll due in 2012. While saying that the resumption of grain exports "may be phased in gradually", with polls ahead, "government policy might be fragmented, inconsistent and dependent on the image of the Unite Party and its leaders rather than focused on long-term investments", the attaches said in a report. Already "political and social considerations" were dogging the introduction of measures to support farmers, through measures such as cheap loans and subsidised fuel, amid the key spring sowing season. The implementation of these policies is lagging behind farmers' spring needs," the attaches said. "The unpredictability of short-term government policy creates uncertainties in the domestic grain market and hampers farmers' decisions and abilities to develop grain production in 2011." Growers themselves have been laden with heavy debts following last summer's dismal harvest, with the export ban limiting the benefit from lower production of higher grain prices. Domestic wheat is some $100 a tonne cheaper than on the world market. The forecast of poor grain export prospects in 2011-12 contrasts with some more upbeat analysis from other groups. The Canadian Wheat Board forecast last week that demand from barley importers "will shift rapidly to Ukraine and Russia". Levels of exports from the Black Sea grain states, Kazakhstan, Russia and Ukraine, are viewed as key for price prospects on international grain markets, with the countries renowned for fierce competitiveness.