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Supply Chain

Russia Stalls Shipping Grain Overseas

By square1
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Russia Stalls Shipping Grain Overseas

Russia stopped exporting grain last week, suspending shipments to customers including Egypt, the nation’s grain union said.

“Exports came to a complete and utter halt,” Arkady Zlochevsky, president of the union, told reporters in Moscow. “Nothing is being shipped. No boats are being put to sea.”

Traders have contracts to deliver worldwide more than three million metric tonnes of Russian grain through January, according to Zlochevsky. Grain shipments stopped on 18 December, he said. Egypt, the world’s biggest buyer, has 180,000 tonnes of wheat due to be shipped from Russia in January, data compiled by Bloomberg shows.

On 22 December, Russia said that it plans to introduce grain export duties, the latest step in an effort to reduce overseas shipments after the rouble plunged and food prices increased. While the country has said that it won’t stop exports, the government has blocked cargoes by denying certificates that grain sellers and buyers need after sanitary inspections, and state-owned Russian Railways Co. halted deliveries to ports for exports last week.

Wheat for March delivery slid 0.2 per cent in Chicago to $6.34 a bushel. Prices have jumped more than 20 per cent in the past two months.

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Aliya Samigullina, spokeswoman for Deputy Prime Minister Arkady Dvorkovich, who is in charge of agriculture, didn’t immediately return a phone call or text message seeking comment.

Egypt Purchases

The General Authority for Supply Commodities, the Egyptian state grain buyer, agreed to buy 60,000 tonnes of Russian wheat in a 20 December tender for shipment next month, along with 240,000 tonnes of French wheat.

Traders should honour contracts to ship Russian wheat in January, according to Mamdouh Abdel Fattah, vice-chairman of the General Authority of Supply Commodities. “This is not a decision by the Russian government, and there are contracts between the authority and the traders which they will abide by,” he said.

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The new restrictions on Russian grain follow export duties in 2004 to limit shipments, a jump in the rates in 2008 and an outright ban in 2010, when drought caused crop failure. Chicago wheat prices soared 47 per cent that year.

“This has happened several times now,” Michel Portier, the head of Paris-based farm adviser Agritel SA, said in a phone interview. “Russia doesn’t gain in credibility as a reliable supplier.”

Bloomberg News, edited by ESM

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