Agrimarket.info: Russia to increase grain quality

Interfax: Russia raises import duty on rice by 70%

MOSCOW. Dec 10 (Interfax) - Starting from December 10, Russia has increased the working import duty on rice in order to support domestic rice producers, who posted a record harvest this year.

Russia's rice import duty will increase to 0.12 euro per kilogram beginning December 10, the Federal Customs Service said.

The export duty will be in effect for nine months.

This year the Grain Union forecasts the rice harvest will total about 1 million tonnes, which will provide about 500,000 tonnes of grain rice.

Russia's annual demand for rice is estimated at 600,000 tonnes. Just four year's ago domestic production was only sufficient to supply 30% of domestic demand.

Last year Russia harvested 738,300 tonnes of rice net weight, 4.8% more than the 704,500 tonnes harvested in 2007

PR-inside.com: Russia Agribusiness Report Q1 2010 - new report released

The establishment of the United Grain Company (UGC) is a key part of Russia´s strategy to recover its status as an agricultural powerhouse, following the market reforms of the 1990s that resulted in large cuts to key industries. The country aims to increase its grain exports to 50mn tonnes per year by 2020. The UGC, yet to begin activities, is set to increase the purchasing and selling of grain on the domestic market, increase grain exports and modernise and construct new port terminals and storage silos. This and other factors have led the report to forecast 16.5% growth in wheat production and 49% growth in corn production from 2009 to 2014 in our Russia Agribusiness Q110 report.

We have updated our rice outlook to reflect milled production, rather than rough production as in previous Russia reports. The change will allow us to use the latest figures available, as well as bring the Russia report in line with those for other markets. Rice production is likely to fluctuate throughout the forecast period but the general trend will be upwards.

Meanwhile, meat consumption in Russia remains low by developed world standards. In 2008 according to data from the Food and Agricultural Policy Research Institute (FAPRI) per capita consumption of beef and chicken stood at 16.6kg and 19.8kg, less than half of that of the US. This leaves plenty of room for growth and, in common with many other emerging markets, we expect meat consumption in Russia to increase significantly over our forecast period to 2014.

The Russian government has stated its aim to become self-sufficient in pork and poultry by 2011. The goal is over-ambitious in BMI´s view, but we nevertheless see poultry production continuing to grow strongly to the end of our forecast period in 2014, building on the 170% expansion seen from 2003-2007.

Anti-import measures, state and regional government subsidies, as well as demand for cheaper animal protein have all boosted poultry production. Between 2009 and 2014 we forecast production to rise by 83% from 1.81mn tonnes to 3.31mn.

We see milk production rising by 10.0% from 2009 to reach 36.1mn tonnes in 2014. While still a far cry from the levels of the first couple of years of the 1990s, this modest growth forecast does at least inspire hope that the industry is starting on the long road to recovery. In October 2009, the Russian government added fluid milk, butter and three types of cheeses to a list of intervention commodities. While no interventions have yet taken place on these commodities, the possibility adds a new dynamic to the dairy industry. This and other key issues are discussed at more length in Russia Agribusiness Q110.

Business, Energy or Environmental regulations or discussions

Rencap
December 10, 2009

Event: RBC reported yesterday (9 Dec) that a 25% stake in TGK5, held by the state, has been included in a government list of assets identified for privatisation in 2010. Along with OGK5, TGK5 was divested from UES as a so-called pilot privatisation project and, unusually a significant state shareholding was retained. KES-Holding, who paid a price 3x higher than the current market price, bought a large new issue of TGK5 shares and currently has a 49% TGK5 stake. Elsewhere, Kommersant reported yesterday that the Federal Grid Company had declared invalid the sales of state stakes in TGK6 and TGK7 to KES-Holding, because of KES's failure to meet deferred deadlines for payment and is claiming fines from KES totalling RUB25.9bn ($850mn).

Action: Neutral for TGK5, in our view.

Rationale: Given an apparent shortage of funds to meet all its obligations, we believe KES-Holding will be forced to choose priorities in its generation empire and, in our view, will focus its resources on TGK5 and TGK9. We surmise that the government decision to press ahead with sale of the state's TGK5 stake before asset prices have fully recovered from the effects of the global crisis is driven by a need to comply with the 2003 Energy Act, which calls for the state to exit from direct ownership in the competitive generation sector. For us, KES-Holding is the obvious contender of the 25% TGK5 stake and we expect share price weakness in the near term.
RenCap: BTA Bank Russia proposes debt restructuring with high risks

http://www.businessneweurope.eu/dispatch_text10715

Rencap
December 10, 2009

Yesterday (9 Dec) Russian BTA Bank announced a bond restructuring proposal for its $100mn CLN maturing in December. Despite the quite generous offer made by the bank, we still see very significant risks to a successful restructuring. We also note that the problems of the bank which drove it to restructuring its liabilities are not typical for Russian banks and are much closer to the Kazakh BTA Bank.

In brief, the proposal presumes an increase in notional amount of debt to 110% of par, of which 10% plus the 2.5% consent fee are due to be paid in January. The rest would be delayed in four equal quarterly arrears starting from June 2010.

We think the main risk related to the proposal is that it effectively puts the bondholders in a position subordinated to the Central Bank of Russia (CBR), to which BTA currently owes around RUB12bn ($400mn) and which has been rescheduled until April. BTA's current financial position looks extremely weak to us and we see the risk of the bank not making the payment to CBR on time as very high.

In our view, the key factor which brought BTA to this point is very similar to that of the Kazakh BTA - aggressive lending to the companies related to the shareholders. Currently, BTA is the institution with highest proportion of CBR funding (a liability of 39% as 30 Sep). We believe that given the nature of BTA's loan portfolio, it will be very difficult for the bank to collect RUB12bn of cash by April to repay the loans to CBR. If the bank is unable to make the repayment, we see the risk of the bankruptcy as quite high, which will significantly decrease the visibility of recovery for bondholders.

(Reporting by Oksana Kobzeva, writing by Robin Paxton) Keywords: RUSAL SBERBANK/ (robin.paxton@reuters.com; +7 495 775 1242; Reuters Messaging: robin.paxton.reuters.com@reuters.net)

MOSCOW, Dec 10 (Reuters) - Sberbank, Russia's biggest lender, has no plans to return to the external debt market in the first half of 2010 but will consider it in the second half of the year, the bank's first deputy chief executive officer Bella Zlatkis told reporters on Thursday.

(Reporting by Oksana Kobzeva; Writing by Dmitry Sergeyev; editing by Toni Vorobyova) Keywords: RUSSIA SBERBANK/ (dmitry.sergeev@reuters.com; +7 495 775 1242; Reuters Messaging: dmitry.sergeev.reuters.com@reuters.net)