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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


22 July 2013

USDA GAIN: Russian Federation Grain and Feed Update - August 2013USDA GAIN: Russian Federation Grain and Feed Update - August 2013

FAS/Moscow’s forecast of Russia’s 2013 total grain production remains unchanged at 91 million metric tons for the total grain crop, including 53 MMT of wheat, 17 MMT of barley, 9 MMT of corn, and 12 MMT of other grains and legumes. Grain exports in the marketing year 2013/2014 are forecast at 24 MMT, including 17 MMT of wheat, 3.5 MMT of barley, 2.5 MMT of corn, and slightly less than 1 MMT of other grains and pulses.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Post:

Moscow

Production:

FAS/Moscow’s forecast of Russian total grain production remains unchanged at 91 million metric tons for the total grain crop, including 53 MMT of wheat, 17 MMT of barley, 9 MMT of corn, and 12 MMT of other grains and legumes.

Harvest Progress

Harvest in the South of European Russia, the major area of high yielding winter crops (wheat, barley and rapeseeds), began in the middle of June, two weeks earlier than last year. As of July 15, 2013, harvest was in full swing in the Southern and North Caucasus federal districts, in some oblasts of the Central and Volga Valley federal districts and also began in Orenburg oblast (Ural Federal District). By July 15, 2013, Russian farmers harvested 24.7 million metric tons (MMT) of grain1 (10.9 million metric tons more than in 2012) from 7.8 million hectares, which is 17.2 percent of the planned grain harvest area. According to the Ministry of Agriculture, wheat was harvested on 6.2 million hectares (24.9 percent of the planned wheat harvest area) and production from this area at 20.1 MMT (8.4 MMT more than on the same date last year). The average yield was 3.26 MT/HA compared to 2.54 MT/HA in 2012. Barley was harvested on 630,500 hectares (7.1 percent of planned area), and production on this area was 2.0 MMT (1.1 MMT more than in 2012 on the same date), and the average barley yield was 3.22 MT/HA compared to 2.76 MT/HA last year.

So far the harvest is ahead of the typical schedule, and the yields are higher than last year. However, some industry analysts already expressed concerns that as the harvest progressed and moved to the Volga Valley and Urals, average grain yields have been decreasing much faster than in 2011. In some places yields have even approached the low levels of the drought-impacted 2012 harvest. The Ministry of Agriculture reported that severe soil dryness affected 7.7 million hectares, including 1.9 million hectares (2.6 percent of sown area) where crops (all agricultural crops, not only grain) were completely lost. This dryness was due to abnormally high temperatures in June and the first weeks of July in such provinces as Lipetsk, Voronezh, Ulyanovsk, Orenburg, Samara, Kurgan oblasts and in Republic of Bashkortostan, as well as in some regions of Chelyabinsk, Rostov, Volgograd oblasts and Republics of Kalmykia and Tatarstan. To date, the Ministry of Agriculture has not changed their 2013 grain crop forecast of 95 MMT but may lower their forecast in the future. Dryness is the main reason for a falling crop forecast. Industry analysts also report higher crop damage than usual as the result of the spread of locusts in the south of the Volga Valley, and from other pests and diseases.

1 All data on harvest progress until the end of harvest is in bunker weight that is 4-8 percent higher than the clean-weight of grain after primary cleaning and drying. Data on the grain crop clean weight is published by the Russian State Statistical Service after the end of the harvest

Trade:

FAS/Moscow forecasts Russia’s grain exports for MY 2013/14 at approximately 24 MMT, including 17 MMT of wheat and wheat flour, 3.5 MMT of barley, 2.5 MMT of corn, and about 1 MMT of other grains and pulses. Some industry analysts are skeptical about the high volumes of exports in MY 2013/14 despite the good crop in the South of European Russia, the major grain exporting region. One of the main concerns is potential purchases from Egypt, Russia’s key customer (and which accounts typically for half of all of Russia’s grain exports in the September-November period). Traders report that so far Egyptian demand has dwindled because of shortages of funds for purchases and the changing political situation in Egypt. Another concern is increased competition from Ukraine in key markets.

And lastly, although production is higher this year in European Russia, very low stock levels of old-crop grain (reported officially) may reduce the volumes of early-season shipments. Analysts at Rusagrotrans, Russia’s major railway shipper of grain, forecast that in July 2013 (the first and in recent years one of the most active months of grain exports) Russia may export less than 2 MMT, compared to 2.1 MMT in July 2012 and 2.5 MMT in July 2011.

The movement of grain, and especially transshipments through Ukraine, could be impacted this year by the epizootic situation Russia. In response to Foot and Mouth Disease (FMD) outbreaks and continued African Swine Fever (ASF) outbreaks in Southern European Russia, the Ukrainian Deputy Minister of Agrarian Policy and Food, Ivan Bisyuk, stated recently that if Russia’s Federal Service for Veterinary and Phytosanitary Survillence (VPSS) does not confirm that it can control the spread of ASF and FMD, then Ukraine may ban the transit of Russian grain to export ports through its territory because of the potential threat of bringing disease into Ukraine2.

According to preliminary trade data, in MY 2012/13 Russia exported 16.1 MMT of grain, including 11.2 MMT of wheat (including wheat flour in grain equivalent, 2.3 MMT of barley, 2.0 MMT of corn, and 0.9 MMT of other grains and pulses.

Source: Federal Customs Service of the Russian Federation



Source: Federal Customs Service of the Russian Federation

2 Mass media information : http://www.unian.net/news/583590-ukraina-mojet-zapretit-tranzit-zerna-iz-rossii.html; http://newsradio.com.ua/rus/2013_07_15/Zapret-tranzita-zerna-iz-Rossii-budet-vveden-v-blizhajshie-dni-Minagroprod/; http://korrespondent.eu/ekonomika/obschestvo-ekonomika/852269

Stocks:

According to official data (Rosstat), on June 1, 2013, grain stocks were the lowest in the last three years: 11.0 MMT, compared to 16.8 MMT on June 1st, 2012, and 19.0 MMT on June 1st, 2011.

Stocks in the South of European Russia (Southern and North Caucasus federal districts), the key exporting region of Russia, dropped to 1.8 MMT, compared to 2.9 MMT on June 1st 2012 and 5.4 MMT on June 1st 2011.

Source: State Statistical Service of the Russian Federation



Source: State Statistical Service of the Russian Federation

Policy:

Grain interventions continue at a slow pace with a steady decrease in the volumes of grain sold. Since the beginning of intervention sales on October 23rd, 2012, the Russian Government has sold 3,687,166 metric tons (MT) of grain, including 2,373,628 MT of wheat Class 3; 867,952 MT of wheat Class 4, and 159,288 MT of wheat Class 5. In addition, 101,195 MT of food quality rye and 185,103 MT of fodder barley were sold during intervention. According to Nikolay Fedorov, Russian Minister of Agriculture, at the beginning of intervention sales the Intervention Fund had 4.6 MMT of grain (all grain), and by the end of June, 1.38 MMT of grain remain. Prices for intervention sales spiked in February, since then sale prices began to decline, and by the end of June these prices had fallen below those at the start of intervention sales in October 2012. For example:

  • At the last session on July 10, 2013, wheat Class 3 was sold for 7,600 rubles per MT (average price), while at the beginning of intervention sales on October 23rd the average price for wheat of milling quality, Class 3, was 7,857 rubles per MT, and reached the maximum of 9,628 rubles per MT on February 13, 2013;
  • Wheat Class 4 was sold at 7,200 rubles per MT on July 10th, 2013. At the beginning of intervention, it was sold at 7,611 rubles per MT, and its price reached the peak of 10,111 rubles per MT on February 19, 2013.

According to Ilya Shestakov, the Deputy Minister of Agriculture, grain procurement to replenish the Intervention Fund may begin in September- October 2013 after the harvesting of major crops is completed. Previously Minister Nikolay Fedorov reported that the Ministry of Agriculture has 5 billion rubles ($155 million) in the budget to conduct grain intervention purchases of the 2013 crop. However, the Ministry calculated that in order to buy 5-6 MMT of grain to the Intervention Fund, the government would need approximately 30 billion rubles ($923 million) of additional credit resources. He stated that addional details on the timing, and amount of intervention purchases would be forthcoming.

Source: FAS/Moscow on the basis of daily information on intervention sales from www.rts.micex.ru

Marketing:

Domestic grain prices have continued decreasing as a result of better grain crop prospects this year. Prices in European Russia have seen the greatest drop, as the new crop has begun to be harvested. From end of May through July 10, 2013, prices of wheat Class 4 (which comprises the biggest portion of wheat exports) decreased in the South of European Russia by 25 percent to 6,733 rubles ($207) per MT, in the Central Black Earth territories – by 29 percent to 6,388 rubles ($196) per MT, and in the Central European Russia – by 26 percent to 6,683 rubles ($206) per MT.

Prices in key spring wheat producing areas had much smaller declines, as the harvest in these areas is still a number of weeks away. Prices in the South Urals and in Siberia have decreased by 1 percent and 5 percent to 8,263 rubles ($254) and 8,067 rubles ($248) per MT respectively.

Source: FAS/Moscow and ProZerno



Source: FAS/Moscow and ProZerno

Industry analysts are also anxious because -- despite quite abundant crop in the Southern European Russia -- the gluten content of wheat is lower than last year. Thus, it will be more difficult to find top grade food quality wheat for exports compared to last year.

July 2013

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