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


07 June 2012

USDA GAIN: Russia Grain and Feed June Update 2012USDA GAIN: Russia Grain and Feed June Update 2012

FAS/Moscow forecasts grain production in Russia in 2012 at 88 million metric tons (MMT). This includes a forecast of 54 MMT for wheat, 16 MMT for barley and 6.5 MMT for corn. Wheat production is expected to fall from last year as a result of spring dryness in key producing regions. Smaller grain production coupled with lower carry-in grain stocks in key exporting regions of Russia will result in lower exports in the 2012/13 marketing year, with total grain exports forecast at 19 MMT, down from a record 27.1 MMT in the 2011/12 marketing year. This 19 MMT estimate includes 16 MMT of wheat, 2 MMT of barley, 0.5 MMT of corn, and 0.5 MMT of other grains and pulses.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Production:

FAS/Moscow forecasts grain production in Russia in 2012 at 88 million metric tons (MMT) down from 94 MMT last year. For wheat, FAS/Moscow maintains a forecast of 54 MMT, down over 2 MMT from last year as a result of poor overwintering conditions in key Southern growing areas as well as dry and hot spring weather in the Volga Valley and Central growing areas. FAS/Moscow forecasts barley production at 16 MMT, down 1 MMT from last year as a result of very significant winter kill of winter barley in the Southern Federal District. Corn production is forecast at 6.5 MMT, down slightly from last year but still the third largest corn crop ever. In Southern European Russia farmers may increase corn sown area on winter grain fields destroyed by winter kill. Forecasts for rye, oats, millet and rice (milled) are at 2.7 MMT, 5 MMT, 0.4 MMT, and 0.7 MMT respectively. Production of other grains and pulses is forecast at 3 MMT. Meanwhile, preliminary forecasts for Russia’s grain crop in 2012 in Russia currently vary from a low of 88 million metric tons by some industry analysts to as high as 93-94 MMT by the Russian Ministry of Agriculture.

Winter Grain Condition

As of mid-May 2012, conditions of winter grain in Russia’s major winter grain producing areas are estimated at worse than in 2011, but close to 5-year averages. Russia’s total area sown to winter grain was approximately 16 million hectares, and according to Ministry of Agriculture, winter kill did not exceed 6-7 percent of the total winter grain sown area. However, the worst frost damage was in two major winter grain producing provinces, Krasnodar and Stavropol krays in the Southern Federal District. In many provinces of the Central, Volga Valley and Southern Federal Districts winter grain was in very good condition in March and the beginning of April, but since then yield expectations have been reduced due to a drastic and unexpected decrease in soil moisture. Many farmers complained that there was practically no spring as cold winter weather suddenly switched to summer heat and dryness. This sudden onset of very hot temperatures resulted in snow quickly melting and evaporating rather than soaking into the soil to improve moisture levels. In addition, this weather has sped up the development of winter wheat, with heading occurring 2 weeks early in many parts. In some areas there was no rain from the first week of April through mid to late May and this significantly impacted the growth of winter wheat. Although rains began to fall at the end of May and this will help in filling of grain, the yield potential is expected to already have been significantly damaged by the previous dryness. TheseMay rains, however, are expected to be beneficial for sown spring crops, including corn and sunflowerseeds.

Spring Sowing

Industry analysts forecast spring grain sown area at 30.27 – 30.28 million hectares, including 13.59 million hectares of spring wheat, 7.66 million hectares of spring barley, 1.77 million hectares of corn, and over 7 million hectares of other spring grains and pulses. As of May 23, 2012 total spring grain crops were sown on 22.55 million hectares, which was 2.71 million hectares more than on the same date last year. Spring wheat was planted on 9.01 million hectares, 0.78 million hectares more than on the same date last year, spring barley was planted on 7.05 million hectares, 1.05 million hectares more than on the same date last year, and corn planted area was 1.71 million hectares, 0.49 million hectares more than on the same date last year.

Information on spring grain sowing by federal districts is from May 16th, 2012:

  • In the Central Federal District spring grains and pulses were sown on 3.73 million hectares (92 percent of planned spring grain area, and 0.14 million hectares more than last year on the same date);
  • In the Southern Federal District spring grains and pulses were planted on 2.27 million hectares (96 percent of planned area, and 0.35 million hectares more than last year);
  • In the North Caucasus Federal District spring grains were planted on 0.56 million hectares (89 percent of planned area, and 0.23 million hectares more than in 2011);
  • In the Volga Valley Federal district area sown to spring grains and pulses were 7.98 million hectares (89 percent of the planned area, and 1.50 million hectares more than in 2011);
  • In the Ural Federal District area sown to spring grains and pulses was 2.29 million hectares (60 percent of planned area, and 0.46 million hectares more than last year on the same date)
  • In the Siberian Federal District spring grains and pulses area was 5.27 million hectares (54 percent of the planned area, and 0.08 million hectares more than on the same date last year).

Thus, area sown to spring grains and pulses in 2012 may exceed 2011 spring area. Although farmers in some areas complain that soil moisture was insufficient at the time of sowing, recent rains will have helped and the final crop will largely depend on the weather conditions from June – August.

Trade:

2012/13 Exports

Smaller grain production coupled with lower carry-in grain stocks in key exporting regions of Russia will result in a fall in exports in the 2012/13 marketing year, with total grain exports forecast at 19 MMT, down from the record 27.1 MMT in the 2011/12 marketing year. While this time last year grain stocks in regions close to export ports were high as a result of the grain export ban, currently stocks in these regions are low as a result of the very strong export campaign (see chart below). While wheat exports in July 2011 were at a record level for that month of 2.6 MMT, July 2012 wheat exports will likely fall back to a more average level of only about 1/4th that amount. FAS/Moscow forecasts Russia’s total grain exports in MY 2012/13 at approximately 19 MMT, including 16 MMT of wheat, 2 MMT of barley, 0.5 MMT of corn, 0.3 MMT of pulses, and 0.2 MMT of other grains, such as rye, rice, oats, millet, buckwheat.

Graph: Year to Year Stock Change in Southern Russia

Year to Year Grain Stock Change in Southern Russia, MMT
(Southern and N. Caucuasus Federal Districts)

2011/12 Exports

After a slow down in January - February, Russia increased grain exports in March – April 2012. Industry analysts forecast grain exports in May and June 2012 at 1.4 MMT each month, and continued exports in these two months may be supported by still attractive world prices and a weakening ruble/strengthening dollar. From July 1, 2011 through April 2012 Russia exported 25.3 million metric tons (MMT) of grain and pulses, including 19.51 MMT of wheat, 0.37 MMT of wheat flour in grain equivalent, 2.99 MMT of barley; almost 1.57 MMT of corn, 0.16 MMT of rice, 0.14 MMT of rye, and 0.55 MMT of pulses.

Graph. Grain Exports in July 2011 through May 2012

Russia's Monthly Grain Exports, 1,000 MT

FAS/Moscow estimates Russia’s grain exports in MY 2011/12 at 27.1 MMT, including 21 MMT of wheat, 3.3 MMT of barley, 2 MMT of corn (record corn exports from Russia), almost 0.5 MMT of pulses and 0.25 MMT of other grains.

Stocks:

Massive grain exports in MY 2011/12 resulted in depletion of Russia’s grain stocks, especially in the Southern and North Caucasus federal districts, the major grain exporting regions of Russia. By April 1, 2012 Russia’s grain stocks at farms and grain processing and trading enterprises and warehouses decreased to 25.8 MMT that was 0.44 MMT less than on April 1, 2011 when grain exports had been banned for already 7.5 months. Moreover, grain stocks in the major grain exporting federal districts shrunk in comparison with April 2011. In the Southern Federal District grain stocks were approximately 3.9 MMT (25 percent less than on April 1, 2011), and in the North Caucasus Federal District – less than 1.4 MMT (32 percent less than on April 1, 2011).

Graph. Russia: Stocks of Grain, MY 2010/11 and MY 2011/12

Russia: Stocks of Grain in Agricultural, Storing and Processing Enterprises

Policy:

The Russian government began selling grain from the intervention fund on April 4, 2012, and through May 24, 2012 had sold almost 1.9 million metric tons of grain, including 193,000 MT of soft milling wheat Class 3, 898,000 MT of soft milling wheat Class 4, 570,000 MT of feed wheat Class 5, and 218,000 MT of feed barley and food quality rye. The value of sold grain exceeded 10 billion rubles. Milling quality wheat Class 4 was in the highest demand, followed by feed quality wheat Class 5. Industry analysts report that the range of buyers was not limited to feed and flour millers. Traders also actively participated in buying Class 4 grain from the intervention fund, but primarily for replenishing their depleting stocks, not for exports.

Government Sales from Intervention Fund, 1,000 MT

In May 2012 the Russian Ministry of Justice registered the Ministry of Agriculture Order about the minimum level of market prices at which the government will begin purchasing grain of the 2012 crop to the Intervention Fund. The government may begin procurement interventions when the market price of milling wheat Class 4 decreases to 4,700 – 4,900 rubles (currently $151-$158) per MT, and the market price of milling wheat Class 3 falls below 5,300 rubles per MT in the Central Russia, and 5,000 rubles per MT behind Ural. The minimum market price for rye is set at 4,100 rubles per MT, and for fodder barley – at 4,250 rubles per MT. Current market prices are 20-30 percent higher than the Ministry of Agriculture’s minimum price, and so far grain procurement interventions in 2012/13 marketing year seem unlikely.

Marketing:

Prices

Domestic prices in rubles continue increasing, while the dollar value of grain is either stable or decreasing due to increased exchange rate from 29.5 rubles per 1 USD a month ago to the current 32.0 rubles per 1 USD.

Graph. Grain Prices, European Russia, EXW, July 1 – May 2012

Grain Prices, European Russia, EXW, US Dollars


Graph. Grain Prices, European Russia, July 1 – October 21, 2011, EXW, Rubles

Grain Prices, European Russia, EXW, Rubles


Graph. Prices of Wheat Class 3, by Regions, Rubles per MT

Prices of Wheat Class 3, by Regions, Rubles

The market price of grain in different districts stabilized in the beginning of April when the Government began selling grain from the State Intervention Fund, and prices began increasing in May.

Graph. Prices of Wheat Class 4, by Regions, Rubles per MT

Prices of Wheat Class 4, by Regions, Rubles

June 2012

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