VILNIUS - Russia’s self-imposed ban on grain exports, put in place as of Aug. 15, could be beneficial for Lithuania’s grain growers but rather disadvantageous for Klaipeda port cargo handlers, reports The Lithuanian Tribune. The benefits of the current situation on the grain market is that the price of commodities is on the rise, therefore Lithuania’s grain producers could sell them with a higher profit margin. However, Klaipeda port companies leasing terminals for grain exporters could lose due to the current state of affairs.
The heat and drought-induced crisis in the prime farming regions of central and western Russia have led to drastic cutbacks in the country’s forecasted grain harvest.
Baravykas adds that at the moment, it is also a huge risk to export pigs to Russia in such high temperatures.
Ramunas Karbauskis, CEO of the Lithuanian agricultural company Agrokoncernas, on Aug. 6 countered that “If the Russians are going to buy, we will sell to them, too, because prices in the East are traditionally higher than those in the exchanges. With the change in the direction of grain transportation, companies that lease terminals at the Klaipeda port may be left without work.”
Russia’s weather problems are having a global impact. Grain prices may increase up to 60 percent for Latvian processors, says agricultural cooperative Latraps Executive Director Edgars Ruza, reports Nozare.lv.
So far in August, Russia has sold 5 million tons of grain, but this is only up to Russia’s ban on grain exports. This has distorted the global grain trading system, and speculators are now pushing prices up. Together with a 30-40 percent price hike on global commodity markets over the past two months, grain prices can now increase another 20 percent, therefore the total increase in grain prices will be 60 percent, speculates Ruza.
Higher prices are in the farmers’ interest. Two months ago, wheat cost 80 lats (114 euros) per ton on the local market; now the price is 145 lats.
Ruza acknowledges that the price bubble should burst sooner or later, which will be a rather painful experience to farmers as well as grain traders who hold out for the last few cents on a trade. The steep increase in grain prices will be inevitably followed by a fall, he believes. Rising grain prices will also affect flour and bread prices down the line, says Ruza.