Prices on wheat markets did not move sharply after the news, as a prolonged export freeze for the former world number three exporter had already been anticipated by some in the market.
The Russian Prime Minister said on Thursday lifting the ban "can only be considered after next year's crops have been harvested," whereas the ban is currently due to run from August 15 to December 31 this year.
Some operators thought Putin had meant to refer to this year's harvest, in line with previous government comments, but a spokesman later confirmed he was speaking about 2011 crops.
Russia's announcement in early August of a suspension of grain exports to safeguard domestic supply and prices in the face of a drought that withered crops sent international wheat markets to two-year highs.
"The suspension of the imports until the fall 2011 are definitely not expected," said Eugen Weinberg, commodities analyst with Commerzbank. "It is coming as a surprise for the market and the market still does not seem to believe in it. Otherwise the prices would have been much higher."
But while the change in the official line on the timeframe for the export freeze was unexpected, traders and analysts said it made sense given the severe disruption caused by Russia's drought emergency.
"We think the impact of the 2010 drought will be felt until 2012," said Michel Portier, head of French grain analysts Agritel, stressing difficult sowing conditions for next year's crops and the financial woes of Russian farmers who are likely to cut back on buying seeds and fertilizer.
Despite some rainfall in parts of Russia since mid-August, conditions remain very difficult for the current winter-wheat sowing campaign, leading many in the market to doubt whether Russia will be able to rebound from this year's drought with a big harvest in 2011.
"I think the Russian crop will probably not be very good: the winter-grain sowings are going to be down because of delays and I don't think that spring sowings can make up for that," said Emmanuel Jayet, analyst with Societe Generale.
The prospect of Russia staying out the export market well beyond the end of this year would also underscore the leading role of U.S. wheat in 2010/11, even though again operators said Putin's remarks would not necessarily change their forecasts.
"This re-affirms that the U.S. will be the world's major source for wheat in the new season as the supplier with the largest available surplus," said Keith Flury of German commodity analysts FO Licht.
"This would also benefit the southern hemisphere suppliers Australia and Argentina along with the EU," he said.
U.S. and French wheat have seen a surge in export sales in the wake of Russia's export ban, but dwindling French stocks are expected to leave room for more U.S. exports, as well as from Argentina and Australia once their crops come on to the market.
Flury said other U.S. grains could also see an export surge.
"When the U.S. corn harvest comes on stream too you are just going to see corn flying out of U.S. ports onto world markets."
But even U.S. supplies could be tested by extra demand if a freeze on Russian exports and a squeeze on shipments from neighboring Ukraine drag on.
"We might be able to generate a little extra business here and there, but if we tighten the carry-out and see some unexpected demand coming in, we're going to see prices start to ration demand," said Shawn McCambridge, analyst with Prudential Bache Commodities.
A potential export boom for non-Russian grain producers could also be tempered by a still-weak global economy, meaning that global supply would not be strained like in 2007/08 when prices soared and some countries saw food riots.
"I don't think it's 2008 all over again because of the (struggling) world economy," said Don Roose, analyst with U.S. Commodities.
Source: Reuters
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