Massive Russian barley exports to cut stocks

Relatively high Russian barley output coupled with historically high world prices is fuelling massive exports, which may severely dent domestic stocks.
The country's barley production in 2003 is officially estimated at 17.95 million tonnes, which is slightly below last year's output of 18.74 million tonnes but well above the 1996-2000 average of 14.24 million tonnes.
In 2002/03, very low winter temperatures in the North Caucasus seriously damaged winter barley plantings and caused abnormally high winter-kill losses.
However, warm weather with abundant rains favoured the development of spring barley plantings in European Russia.
In Central Russia, barley yields were at a record high. In the regions on the Volga river, the yields were even higher than in the previous two years and significantly above average.
As a result, barley production in the Central federal district reached a ten-year high. In the Privolzhsk federal district, the production was the highest since 1997.
Abundant barley crop in the central and Volga river regions nearly offset the decline in winter barley production in the North Caucasus.
Good barley output combined with historically high world prices and relatively low domestic prices has been encouraging barley exports.
In July-November 2003, exports amounted to 2.145 million tonnes, against 1.56 million tonnes over the same period of the previous year.
In contrast to wheat and rye, barley exports remain free of export duty so far. If the government does not introduce restrictions on barley, its exports may reach 3.5 million tonnes in 2003/04.
It will be close to the 2002/03 record high shipments and will make Russia the leading world exporter of feed barley.
However, domestic demand for barley is also increasing. In addition to the pig breeding sector, which is the major barley consumer, some large poultry producers have started using barley for compound feeds due to abnormally high domestic wheat prices.
Strong domestic demand combined with high exports is likely to result in a serious decline in the ending stocks of barley, which SovEcon currently estimates at 0.75 million tonnes, or just 4.8 percent of domestic consumption volumes.