Bangladesh to buy Ukrainian wheat if Russian grain unavailable

Reuters . Dhaka | Update:

Combines harvest wheat in a field owned by the `Siberia` farming company outside the village of Ogur in Krasnoyarsk Region, Russia on 8 September 2019. Reuters File PhotoBangladesh will increase its wheat purchases from Ukraine if Russian grain becomes unavailable because of new export curbs being considered by Moscow, Bangladesh's agriculture minister Abdur Razzak said on Thursday.

Russia, the world's largest wheat exporter, said on Tuesday it was looking to set a non-tariff quota for grain exports of 20 million tonnes for the first half of 2020. The agriculture ministry's proposal has yet to be approved by the government.

"This kind of restriction is unfortunate," Razzak told Reuters.

Bangladesh is the third largest buyer of Russian wheat after Turkey and Egypt and it imported 1.2 million tonnes in July-November 2019.

Russia, which competes with Ukraine to supply wheat to Africa, the Middle East and Asia, is a member of the World Trade Organisation (WTO).

Under WTO rules, countries are not supposed to set export restrictions except for a short time to prevent a critical shortage of food or other products, or to help the international marketing of a product, such as by spreading exports over time.

"We are not going to lodge an official complaint, rather we'll shift to Ukraine to meet our demand," Razzak said.

Russia's agriculture ministry has said it does not want potentially favourable conditions for Russian grain exporters at the moment to lead to a shortage of grain in the domestic market in the first half of the year.

The ministry did not respond to a request for comment about how export restrictions would correlate with WTO rules.

The WTO declined to comment.

Export prices for Russian wheat are currently at their highest for the season and trade margins are thin.

One trader focused on Russian wheat said it would be better to have a formal quota mechanism than be subject to the kind of informal limits Russia imposed in 2015, as those curbs made it difficult for traders to meet their forward contracts.

"At least it is going to be official. And the game rules are going to be set," the trader said.

The quota proposal was disclosed before the Russian government resigned this week. It remains unclear when the new government will be fully formed and how it will react to the proposed export restrictions.

   
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