Russian Grain Drives Demand

Importers have shown favor for cheaper Russian wheat, reducing demand for grain supplies and feed ingredients from the world's top exporter, the United States. Russia lifted the previously instilled ban on grain shipments on July 1. The August 2010 ban was imposed as a result from the damage to crop caused by drought.

"At these prices, I'm not optimistic," said the president of Advanced Market Concepts in Wamego, Kansas, Darrell Holaday, in a telephone interview with Bloomberg reporters. Holaday explained that Russia is "dumping their wheat" and excess grain into the export market in order to turn a profit. The low prices offered by Russian grain exporters help control the demand for the product by making it more appealing.

Government data shows that wheat is the fourth-largest U.S. crop, just behind corn, soybeans and hay. With the influx of Russian wheat and the anticipation of Russia exporting as much as 20 million to 25 million tons of grain in this season alone, many U.S. exporters are concerned about the future of their animal feed and grain exports.

However, some importers were reluctant to import from Russia due to the relationships built with French and United States exporters. They're also wary to get into business with Russian exporters after the August 2010 ban. Egypt, the top-wheat importer, was one of the reluctant nations; however, Egypt could not resist the low grain prices offered by Russia.

"Russian exporters need to re-establish their positions in their traditional markets... If not for the aggressiveness, Russia would not have won the Egyptian tender,” said Andrei Sizov Sr., Chief Executive and President of Agricultural Analysts at SovEcon. Many believe that for buyers like Egypt it is about mitigating your risk, which is why many are surprised that Egypt revived their imports from the previously drought-ridden Russia.

Some are concerned over the value of the grain produced by Russia. One analyst believes that Russia is trying to move some of the old crop to make room for new crop, which explains the low-priced grain compared to the price of other international grain exporters. Russia is estimated to have a harvest of nearly 92 million tons of grain, compared to the 2010 harvest of 61 million tons of grain. Other countries struggle due to the depleted quality of grain caused by the various breakdown margins.

While many countries are struggling with whether or not to trust Russian exporters and the grains available elsewhere in the world, many exporters are trying to find unique ways to market their animal feeds, feed ingredients and other grains. Only time will tell what the outcome of the 2011 grain export season will hold, so for now, many companies watch and wait.

Exporting 101

Have you gone global?” More often than not the response is: “No, not yet.”
What’s the holdup? Responses generally fall into these top 10 excuses.
1. Fear of failure
For many companies, doing business overseas is outside the comfort level. There are a unique set of challenges in exporting, and the knowledge gap can paralyze domestic manufacturers. This is where Fornazor International can be of assistance. We know we can succeed on your behalf.
2. Exporting doesn’t apply to my business
If you can produce 5,000 or 50,000 of something, then you certainly have the capacity to export.
3. I have no idea how to go about it
With the Internet, anything is possible to learn! You can familiarize yourself with all topics related to exporting opportunities.
4. It will take away from my domestic operations
The first time you sold multi colored lollipops to Kansas, did it take away from your local Chicago business? Doubt it. If anything, it fueled the notion that you can grow with ease and should be looking at opportunities elsewhere.
5. Where will I find customers?
They are everywhere. You just need to know where to look. Are you on LinkedIn, Facebook and Twitter? Use these websites to ask questions. For example, “I am seeking customers for sea salt crusted caramels made in San Francisco. Is anyone interested?”
6. I can’t afford it
Can you afford not to grow?
7. I don't have time to manage exports
If a customer in Ireland wants to order 50,000 of your cookies, would you find the time, especially if you netted an extra U.S. $100,000 in profit at the end of the year? Rethink how you are looking at going global.
8. My manufacturing facility could never keep up with the demand
Is your factory currently producing thousands of products for you or other companies? If so, then it has the capacity to manufacture to specification for your overseas customers.
9. Too complicated
Like anything new, it seems complicated at first, but it’s really more about managing change. Change has its challenges. Once you educate yourself about the unfamiliar, and come up with a plan that takes small steps toward results, you’re well on your way.
10. I am scared I won’t get paid
Fornazor pays USA manufacturers up front, and takes title of the goods before exporting. You have no reason to worry about payment.


New Jersey based Fornazor International is a well-established and reliable exporter, in business for more than three decades. We can make exporting a no risk opportunity for your company and bring your brand to the global market. We will act as your partner to sell, distribute, prepare documents and arrange logistics including LTL consolidation.

Call us to learn how Fornazor can take your product global. (201) 664 4000. www.fornazor.com

**excerpted from American Express Open Forum “Top 10 Excuses for Not Going Global.”