Russia reaches record wheat exports for last season

Between July the first 2011 and April 15 this year Russia has exported 18.5 million tonnes of wheat, a record amount. This broke the previous record of 18.275 million tonnes during the 2009-10 season. The figures come from the Russian Institute for Agricultural Market Studies.

By June 30, 2012, the end of the agricultural year, Russia is expected to export over 20 million tonnes of wheat. Major importers of Russian wheat are Turkey and countries in North Africa and the Middle East.

Total grain exports are expected to reach 25 million tonnes if not more. 25 million tonnes would also be an export record. Russia is now the second largest grain exporter in the world. The largest is the U.S. In Chicago and New York Black Sea grain futures will be launched and this may promote more exports. For more see this article.

Russia: 35.1 billion U.S. capital outflow in first quarter

Not only are companies shipping out funds but Russians are buying up euros and dollars. The outflow this year compare with a 19.8 billion (U.S.) outflow during the same period last year.

­ Ordinary Russians also spent 54 per cent more on foreign currency this year compared to last. The number of Russians purchasing foreign funds increased from 4.4 per cent to 5.5 per cent.

The political situation and the declining value of the euro may both have played a part in the increased outflow. Outflows defied predictions. The Central Bank of Russia predicted that March outflows would be lower than in February but they were several billion higher in actuality.

Some experts think that the outflows will continue high but others predict the opposite due to steady growth in the Russian economy and the high cost of funding in roubles. For more see this article.

Russia to slash external debt plans.

Russia has already placed a 5.5 billion Euro bond issue. All the rest of Russian borrowing will be in the domestic market even though originally it had intended to raise 17.8 billion abroad. Investors are obviously rather risk averse and so the costs of raising money abroad might be quite high. This is from the Moscow Times.

Finance Ministry's Pankin Says Russia Will Curtail Foreign Debt Sales

The government will slash external debt plans and may not tap the market at all in 2011-12 after pushing through its first eurobond in a decade before Greek woes spiked risk aversion, Deputy Finance Minister Dmitry Pankin said.

Russia raised $5.5 billion in its first eurobond in over a decade last month, with the oversubscribed issue showing how far it has come since the 1998 domestic debt default.

As well as plugging a post-recession budget deficit, the placement was intended to improve borrowing conditions for Russian corporates.

But investor risk appetite took a serious knock from the Greek debt crisis, and yields across the board — including for new issues — surged.

"We just caught the last wagon of the train because one week after our bond issuance it could be much more difficult to get such results and as we see spreads are rising," Pankin said in an interview.

"We pushed the benchmark 20-30 basis points down. Maybe our expectation was that we could have better results, but the market was not as beautiful as it was at least one week before."

Russia had originally planned to borrow up to $17.8 billion abroad this year, and similar amounts in coming years. But officials have since said all further borrowing this year will be done on the domestic market.

"I think our main strategy is to borrow in the internal market, mainly using ruble instruments," Pankin said, adding that this strategy would also apply in years ahead.

"Our plan is that we diminish our external borrowing from up to $20 [billion] to up to $7.5 billion … for 2011 and 2012. But it's only an indication that we can borrow. Now it's difficult to say exactly whether we will borrow or not."

Total borrowing needs for this year though are unlikely to be less than the expected 1.5 trillion rubles ($50 billion) despite higher oil prices.

"We are preparing a revised version of the budget projections, but I think it would be rather difficult for this year to get a budget deficit substantially less than 6.8 percent," Pankin said, citing ruble appreciation and "much bigger demand from other ministries for additional spending."

Yields on the five-year Eurobond, sold with a coupon of 3.625 percent, have risen above 4 percent. The 10-year with a 5 percent coupon now yields 5.3 percent.