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. Last Updated: 07/27/2016

Another Poor Grain Harvest Predicted

Russia's grain harvest is proving to be one of its smallest in three decades, prompting trade sources Monday to speculate that the government could return to world markets for imports to feed the military and remote areas.

The nearly complete 1996 harvest, bucking a trend of increased grain output around the world, weighs in at a gross 74.6 million tons, with little high-quality bread wheat and virtually no stocks from last year's disastrous output, which was the worst in more than 30 years.

"The figure is, I think, slightly lower than we expected," said a Western agriculture source, commenting on preliminary data published Friday by the State Statistics Committee. "It means additional imports."

The cash-strapped Russian state insisted last year it had long ago left world markets for good.

But Anatoly Manellya, head of agriculture forecasting at the Center for Economic Trends, a think-tank set up by the Russian government, said the Federal Food Corporation, the state agency responsible for reserves to feed the armed forces and remote towns, might soon be in the international market.

"The Federal Food Corp. is probably going to try to do some deals," he said, adding only that it was in preliminary negotiations.

The agency has bought a mere 450,000 tons of domestic grain out of the 4.5 million tons it plans to buy this year.

"As far as I know, the government is talking about possible imports for us, but I cannot tell you anything more since we merely fulfill government orders, and they have not yet told us anything," said the corporation's deputy director, Yury Lysenko.

Russia's harvest last year was officially 63.4 million tons, and record-high world grain prices kept traders from importing any significant quantities.

This year prices are lower after bumper world harvests, with benchmark Chicago contracts at $3.75 per bushel after a long spell above $5 and a spike to $7.50 in March.

But Russian farmers, mindful of recent high prices, have declined to sell to state reserves, making government officials jittery over how to feed the soldiers and isolated Arctic cities that cannot depend on the private sector.

"It seems like more and more contracts are being talked about, especially in the [Russian] Far East," said a Western source, who forecast Russia's total grain imports over the 1996-97 crop marketing year from all sources at 5 million tons.