Outlook for China and Russia as grain destinations

by Emily Wilson
Share This:

WHILE HE DOES NOT predict an immediate turnaround for the export grain business, Bruce N. Ritter, executive vice-president of Louis Dreyfus Corp., is optimistic that a significant improvement looms. Holding the key to a turnaround, he said, is one destination — China.

"In buying these export elevators in the U.S., we are making a statement that we believe we are near the bottom of the cycle," Mr. Ritter said. "Which is not the same as saying we are now at the bottom, and we are not saying how soon we will come out of the bottom.

"To have a recovery it will take changes in the export status of China, but its rapid accession to the World Trade Organization could move this process forward. There is rapid change in China driven by philosophical moves away from self-sufficiency. We expect over the next few years a shift from China as a large exporter of coarse grains to an importer of grains. Right now China is exporting millions of tonnes of grain each year. I'm optimistic, but for U.S. exports, the outlook will be a China-driven phenomenon."

The Dreyfus strategy regarding China appeared to have received a boost by the recent decision by the U.S. House of Representatives to grant China permanent normal trade relations.

While in the 1970s and 1980s, China's role as an importer of grains went hand in hand with the Soviet Union's, Mr. Ritter said that Russia and former Soviet states should not be considered major outlets for grain exports in the years ahead. He said the economic situation in Russia presently is better than perceived. That country, he indicated, will be a competitor in world grain export markets, not the answer to expanding exports. Further in the future, Russia could be a larger importer of proteins, but Mr. Ritter said, "We do not see Russia as a significant grain importer in the foreseeable future."