Monday, January 25, 2010

Russia to ship wheat to Cuba, Bangladesh

Russia to ship wheat to Cuba, Bangladesh
Monday January 25, 2010 02:10:14 AM GMT
* State trader starts sales from intervention stocks
* 100,000 T in aid to Cuba between Feb and summer
* Up to 300,000 T to Bangladesh, time unknown
* Plans to sell intervention stocks in 2 years
By Aleksandras Budrys

MOSCOW, Jan 25 (Reuters) - Russia's new state grain trader will ship
wheat to Cuba and Bangladesh in the first of several deals to offload
large state stocks with minimum impact on world grain prices, the head
of the company said on Monday. United Grain Company Chief Executive
Sergei Levin said his firm planned to ship 100,000 tonnes of
fourth-grade milling wheat to Cuba as humanitarian aid between February
and summer. The grain will come from the government's intervention stocks.

UGC also plans to ship up to 300,000 tonnes of the same type of wheat to
Bangladesh under an inter-governmental agreement that will act as a
blueprint for similar deals with other nations over the next two years,
before commercial trade begins.

Levin said no dates were set for the Bangladeshi cargoes.

"One of the targets of selling the intervention stocks is to minimise
the negative impact from sales of substantial volumes of grain to the
world market, and not to damage Russian grain exporters by lowering
prices drastically," Levin said.

"The mechanism of sales under inter-governmental agreements implies that
the grain bypasses standard commercial turnover. Currently, we are
studying the possibility of such sales with some countries," he told a
news briefing.

Russia, one of the world's largest wheat exporters, has nearly 10
million tonnes of grain in its intervention stocks and intends to keep
buying cereals until the end of January.

Levin said UGC intended to ship grain from its stocks at zero profit,
selling it at the same prices at which it had bought the cereal at
purchase intervention tenders.

UGC, formed last year, expected to sell about 4 million tonnes of grain
from state stocks in 2010, Levin told Reuters in an interview on Dec.
23. On Monday, he said volumes could differ as 4 million tonnes was a
"target" figure.


First Deputy Prime Minister Viktor Zubkov, who oversees Russia's
agricultural sector, said in December that volumes of grain shipments
with some countries on a tied-loan basis had been determined and could
start within days.

Levin declined to identify more recipients of Russian grain on this
basis, through which Russia effectively provides a loan in the form of
grain that can be repaid at the equivalent cash value at a later date.

The Agriculture Ministry said last September that the possibility of
shipments on this basis to Egypt, Russia's biggest wheat export market,
had been examined.

Levin said UGC had postponed the launch of sales of its maize stocks,
which total 156,000 tonnes, until the end of this week or the beginning
of next week, as it expected more potential buyers to emerge.

He said UGC intended to keep selling stocks mainly on the basis of
inter-government agreements over the next two years, before starting to
trade grain on a commercial basis.

"Taking into account the volume of grain in the intervention stocks, the
priority of UGC will be selling this grain, rather than starting
commercial sales," Levin said.

UGC's priority investment plans, he said, included developing the
capacity of its Novorossiisk terminal on the Black Sea, building another
deep-water terminal on the same coastline and a terminal in Russia's Far

He said UGC was also studying the possibility of developing Russia's
Baltic Sea ports to facilitate exports from the country's Central Black
Soil region.

Arkady Zlochevsky, president of the Russian Grain Union (RGU), told the
same briefing his union was lobbying for a 50 percent cut in rail fees
for all grains shipped to the country's far east for a period of 10
years, to stimulate exports.

Currently, a discount fee has to be set every year and is applied only
to shipments longer than 1,100 km (690 miles). (Editing by Sue Thomas)
Russia to ship wheat to Cuba, Bangladesh-UPDATE 2 06:25 Hours ago (25
January 2010)

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