More Rumors & Fears In Regards To Russia Eventually Banning Grain Exports
Jul 19, 2012
We have heard countless rhetoric out of Russia that they will NOT be banning grain exports any time soon. As their production totals continue to fall you have to wonder however just how long they will be able to continue in this regard? There is now talk circulating their total grain production could fall to 80 million metric tons (much lower than last years 94.2 million), while their domestic demand is now north of 72 million metric tons. This has many questioning just how much grain Russia will even end up being able to export. Some are saying we may not see an actual ban, but Russia may instead hike the export taxes like they did back in 2008 in order to slow exports. Several analyst are saying nothing may happen at all until this winter when supplies start to get much tighter. I just want to let US wheat producers know that there is a chance the Russians may eventually be forced to slow down or halt their wheat exports. If this were to happen prices may shoot even higher, just depending on when it occurs and the crop conditions amongst other world suppliers. The USDA has already cut their Russian wheat export estimates down to 12 million metric tons. From my perspective if this number continues to slide I have to believe global wheat prices should continue to work higher, especially if you consider Russia is one of the world biggest "low-cost" providers. We believe US producers should continue to hold-off on marketing any additional wheat bushels at this juncture.
Additional thoughts on wheat...
Monsoon rains in India continue to come up short. I hate to sound like a broken record but the Monsoon rains that start in the southern parts of India in early June and generally advance quickly to the northern regions continues to disappoint. From what I hear the entire country is still more than 20% below normal rainfall and many areas are still 50% below normal moisture levels. This is not only a concern for wheat, but it could also become a big problem for sugar... India is the world's second largest producer of sugar, rice...India is the world's second largest producer of rice behind only China, cotton...once again the world second largest producer. Do you realize India produces about 20 million more metric tons of wheat than what we produce here in the US and or in Russia. They produce at least 50 million tons more than either Canada or Australia. The point I am trying to drive home is that "WEATHER" in India is extremely important when trying to determine global supplies and overall price direction. They are certainly not having the problems we are having, but there is some fear if El Nino actually takes hold during the next 30 days it could further limit the monsoon rains in India.
We are making some moves in response to what the market is showing us. You can sign-up here to receive a FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets. Just click here - Van Trump Report