Experts consider 2015 to be more of success than failure for the grain market, but they all agree that the year was not easy. On the one hand, in the 2014-2015 agricultural year Russia harvested one of the largest grain yields in history, which allowed exporting record volumes of grain - more than 30 million tons. Yelena Razumova, the expert of the Analytical Center, said that in the first half of the 2015-2016 agricultural year the grain yield is also good, so ‘exports are likely to remain at the previous year's level.’
Turkey and Egypt remain the main export markets for Russian grain
Speaking about the expansion of the export geography Ms Razumov said that to enter Asian markets of grain Russia, firstly, lacks trade contracts in this area, and secondly, has no developed infrastructure for supply - terminals, cars, ports. ‘Moreover, Russia has to compete with its long-time grain partner in Asia – Australia,’ the expert said in an interview to RIA Novosti.
The lack of contracts with local companies is an obstacle for Russian grain entering markets of the Middle East - for example, Iran’s one. ‘Furthermore, there is an extremely high level of grain reserves in the world, the competition is also very high, so it is difficult to occupy a new niche,’ said the expert. Another limitation of growth for trade with the Middle East is the increasing own production of grain in the region. ‘However, within three to four years, if the current volume of gross output of grain remains stable Russia will build its own business in the markets of the Middle East – it is a very likely scenario for the sector,’ considers the expert.
There is an extremely high level of grain reserves in the world, the competition is also very high, so it is difficult to occupy a new niche.
Yelena Razumova, Expert, the Analytical Center for the Government of the Russian Federation
However, if Russia cannot discover new grain markets, then at least it does not lose its proven customers - Egypt and Turkey. By an unpleasant twist of fate, the main importers of Russian wheat were in the main foreign policy news in 2015. After those events there were concerns about the slowdown in grain supplies from Russia to Egypt and Turkey, which occupy the top of the list of Russian wheat procurements.
However, cooling relations with these countries did not affect the volume of grain exports from Russia: ‘The probability of a significant change in Russian grain procurement policies of Turkey and Egypt is extremely unlikely.’ In particular, Turkey cares for Russian wheat not only because of the competitive price, but also because of quality of grain: it is hard to find similar grain quality. ‘Egypt cares about the price and Russia leads in this freight (shipping) sector,’ said the expert.
‘Therefore, in the medium term, the role of these export markets, if we do not take into account possible political decisions on grain trade, will remain the same,’ concluded Ms Razumov.