Russia's Agriculture Ministry signalled on Thursday that a further cut in Russia's harvest forecast to 70-75 million tonnes was in the offing, two days after Prime Minister Dmitry Medvedev announced the crop would be lower than previously expected.
Visiting Volgograd, a provincial capital in the Volga River valley where drought is spreading and threatening yields, Medvedev had announced a new government forecast of 75-80 million tonnes — a five-million-tonne cut in the range.
A government source said this week that under a maximum forecast of 80 million tonnes, Russia could produce up to 50 million tonnes of wheat.
"Eighty million tonnes was the optimistic forecast. I think it will decline and go to a figure of 70-75 million tonnes," Deputy Agriculture Minister Alexander Chernogorov was quoted as saying on Thursday at a conference in Novosibirsk, the provincial capital of another drought-hit region in Siberia.
"This trend is present," he said.
Russian officials have been scrambling to reassure grain markets, which were shocked in 2010 by Russia's snap decision to ban exports after that year's drought. There is now speculation that Russia could limit exports again this year.
Medvedev said on Tuesday that Russia would still retain an exportable surplus and that domestic needs — which average 70 million tonnes per year — would be amply covered with new crop grain and stocks.
His deputy, Arkady Dvorkovich, reiterated Medvedev's 75-80 million tonne forecast on Thursday and said Russia could export 10-12 million tonnes of grain.
He said the current pace of export — much slower than last year's flood of exports when Russia lifted the export ban on July 1, 2011 — posed no immediate risk to inflation targets or domestic food supplies.
"Exports are now running at a moderate pace and will be below the 2011 level," Dvorkovich told a briefing after a government meeting on Thursday.
