Russia's Medvedev forecasts early removal of grain ban-UPDATE 1

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Monday September 06, 2010 09:02:13 PM GMT

* Says grain ban may be lifted before end of 2010

* Says government stocks may prove to be insufficient

(Releads with intervention stocks, adds details, background)

By Denis Dyomkin

VORONEZH, Russia, Sept 6 (Reuters) - President Dmitry Medvedev signalled on Monday Russia's ban on grain exports may be lifted earlier than Dec. 31 this year and state grain stocks may be insufficient to cover the drought-hit country's needs.

His remarks contradict Prime Minister Vladimir Putin, who has said the ban may be extended to late 2011.

Falling wheat output in Russia, last year's world No.3 exporter of grain, drove benchmark U.S. wheat futures to two-year highs of $8.41 a bushel in early August and sparked fears of food price spikes.

"The grain embargo is a forced but temporary measure ... As soon as we understand how much grain we have harvested, the embargo will be lifted," Medvedev said.

"All embargoes will be lifted, there should be no doubt about that," he told agricultural commodities producers in the city of Voronezh, capital of a region badly hit by the drought.

Russia has set an export ban on all grain and grain products from Aug. 15 to Dec 31 to stabilise domestic prices after the drought was estimated to cut the country's grain output to 60-65 million tonnes from 97 million tonnes in 2009.

Moscow has sent mixed signals about the ban already. Medvedev said last month the ban could be lifted before its planned Dec. 31 expiry, depending on the harvest while Putin said it could last into 2011.

SovEcon agricultural analysts said earlier on Monday they expect the ban to be lifted in the middle of 2011.

RUSSIA MAY NEED GRAIN IMPORTS

Medvedev also said that the government grain stocks were insufficient to cover all of the country's needs, in what could potentially be a signal of the need for imports.

"The intervention stocks will not be enough to close all the issues... In any case we need to ... look for grain," he said.

"Bottlenecks (in the market) still need to be opened, and that is the responsibility of the government."

The government intervention grain stocks are currently 9.5 million tonnes. It is part of the total intervention stocks estimated to be between 21 and 25 million tonnes. Analysts believe stocks may be lower.

Officials and analysts have said Russia may have to import 3-6 million tonnes of grain as a consequence of the drought in the current 2010/11 crop year, which started on July 1. (Writing by Aleksandras Budrys; editing by James Jukwey)

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