The grain export ban in Russia, the world's second largest grain exporter, which took effect on August 25 last year, is expected to be lifted by July 1 this year. Russia had decided to implement the ban in question due to its worst drought in at least 50 years which caused the national grain crop to fall by 37 percent to 60.9 million metric tons last year.
Considering the initial expectations for 20 million mt of grain exports in the 2011-12 season, market players state that freight rates from Russian ports may increase in the coming period due to the lifting of the grain export ban, as this is expected to reduce the availability of vessels in the Black Sea area.
In addition, on May 25 this year, the cabinet of ministers of Ukraine, once the world's largest barley exporter, decided to set a quota-free regime for wheat and barley exports. This step followed an earlier decision by the Ukrainian government to lift export quotas on corn. As a result, the lack of vessel availability in the Black Sea area may become more pronounced in the coming period.
Nevertheless, last year, when Russia first imposed the grain export ban, the Baltic Dry Index (BDI) saw an increase as grain buyers had to source their requirements from longer haul destinations including the United States and Australia.