Russia Sending Mixed Signals On Possible Grain Export Restrictions

September 21, 2012 01:21 AM

What Traders are Talking About:

* Russia sending mixed signals on grain export restrictions. Russian officials have consistently insisted the country is not considering grain export restrictions despite drought-reduced production this year and speculation such action is likely. But that changed overnight when Economy Minister Andrei Belousov said grain export restrictions are "entirely possible" if domestic prices continue to rise. However, Deputy Prime Minister Arkady Dvorkovich almost immediately refuted Belousov's comments, saying, "Exports will continue as normal. We do not plan any restrictive measures for the agricultural market."

The long and short of it: The mixed signals coming from Russian officials are supportive for wheat futures as they add to speculation that Russia -- at some point -- restrict grain exports.

* Informa to issue 2012 wheat estimate, 2013 acreage numbers this morning. Informa Economics will update its estimate of U.S. wheat production in advance of USDA's Sept. 28 Small Grains Summary. Informa will also issue its initial acreage estimates for 2013, including revised 2012 acreage and U.S. production implications for the 2013 crop year.

The long and short of it: Most of traders' focus will be on the 2013 acreage forecasts. Expectations are Informa's projections will be bearish.

* Asian demand building. Asian buyers are using the price break to extend grain coverage, as expected. South Korea, Japan and Taiwan have all been buyers this week, with South Korea being the most active. While supplies are tight and there is still plenty of end-user demand under the market, the increase in demand hasn't been enough to offset seasonal pressure and fund liquidation to this point.

The long and short of it: As I said yesterday, big purchases and China have been absent, limiting the price response.


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