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


12 July 2012

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

Dryness and hot weather in key winter grain growing areas has negatively impacted crop prospects in Russia. As a result the FAS/Moscow forecast for Russia’s grain crop in MY 2012/13 is lowered to 86 million metric tons (MMT), compared to 88 MMT last month and 94 MMT for MY 2011/12. This total includes 51 MMT of wheat, 16 MMT of barley, 7.5 MMT of corn, and 11.5 MMT of other grains and pulses. The grain export forecast is also lowered to 18 MMT (compared to 27.9 MMT last year), including 14 MMT of wheat, 2 MMT of barley, 1.5 MMT of corn, and 0.5 MMT of other grains and legumes.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Production:

2012 crop forecasts

FAS/Moscow decreased the grain crop forecast from the previous forecast to 86 MMT (from 88 MMT), including 51 MMT of wheat, 15.5 MMT of barley, 7.5 MMT of corn, 2.7 MMT of rye, 5.0 MMT of oats, and 4.2 MMT of other grains and pulses. Industry experts’ forecasts of Russian grain crop in 2012 vary from a low of 80 - 81 MMT to a high of 91 MMT.

The Russian Ministry of Agriculture (MA) decreased its grain crop forecast all the way to 85 million metric tons (MMT) from the previous forecast of “over 90 MMT” as a result of winter kill and unfavorable spring weather (hot and dry) in the major grain producing provinces of European Russia. The forecast is based primarily on the Russian Hydrometeorological Service (RosHydromet) reports.

According to RosHydromet, winter grain crop production in the Southern and North Caucasus Federal Districts (FD) has decreased by at least 10 percent from the average because of continued soil dryness and low precipitation. The development (vegetation) of winter grains in the South of European Russia was accelerated by 10-20 days this due to the early onset of a hot spring, but the crop condition is considerably worse than last year. This dry and hot weather comes on top of the fact that winter crops in some provinces of the North Caucasus FD and in Kalmykiya (Southern FD) suffered from adverse winter weather, with a combination of winter frosts and thin snow coverage damaging the crops.

In addition to those Southern districts, a hot and dry spring also affected winter crops in some provinces of the Central and Volga Valley FDs, such as Belgorod, Voronezh, Kursk, Orenburg and Saratov oblasts. June rainfalls in the Central, Southern and North Caucasus Federal Districts and in some provinces of the Volga Valley Federal Districts were likely too late to improve the winter crops and early-spring crops (such as barley) yields. According to RosHydroMet, despite rainfall at the end of June the stands of spring barley were short, and the number of tillers was smaller than last year. However, these late June rains were favorable for the late-spring crops, such as corn and sunflowerseeds.

Grain sown area

According to the Ministry of Agriculture, area sown to spring grains was 30.1 million hectares, 0.4 million hectares more than in 2011. The Ministry of Agriculture estimates the total grain area (spring and winter) at 44.8 million hectares. Some industry analysts believe that winter crops were killed on more than 11 percent of winter grain area (the Ministry’s estimate is only 6 percent) and that the total grain area in Russia is not higher than 44.3 million hectares.

Harvest begins

Harvesting began in Krasnodar and Stavropol krays on June 19, or 10 days earlier than typical as hot and dry spring weather accelerated the speed of development of these crops. Since the first crop harvested is winter barley, and this crop suffered the most from winterkill, preliminary reported yields are much below the last year. Thus, by June 21 farmers in Krasnodar kray harvested 107,000 metric tons of grain (mostly barley) with yields 30 percent below last year’s. Some farms report that winter wheat yields vary from 3.0 to 3.5 MT per hectare, while in 2011 they were 5.0-6.0 MT per hectare.

However, as the harvest has progressed yields have improved and by the end of June yields of harvested grains in Krasnodar kray were only 20 percent below the last year’s yields on the same date. Early reports from Stavropol kray were average yields at 40 percent below last year’s. As of June 28, farmers in the Southern and North Caucasus federal districts harvested 3 MMT of grain, including 1.3 MMT in Stavropol kray, over 1 MMT in Krasnodar kray, and approximately 1 MMT in Rostov oblast.

Trade:

FAS/Moscow forecasts Russia’s grain exports in MY 2012/2013 at 18 MMT, down sharply from the 27.9 MMT in 2011/12 as a result of lower production and tight grain stocks in key growing areas. The 18 MMT estimate includes 14 MMT of wheat, 2 MMT of barley, 1.5 MMT of corn, and 0.5 MMT of other grains and pulses. Russian Ministry of Agriculture forecasts grain exports at 20 MMT, and industry experts’ forecasts vary from 15 to 22 MMT.

Grain exports in MY 2011/12 is estimated at 27.9 MMT, including 27.0 MMT of grain, such as wheat, barley and corn, and 0.9 MMT of rice, rye, and pulses. Grain exports in May 2012 were 1.2 MMT, the lowest month since grain exports were restarted in July 2011. The sharp decrease of exports is due to depleted grain stocks in the Southern European Russia, the main grain exporting region, and increased domestic prices. Industry analyst report that a significant portion of grain exports in May were from grain that had come from the State intervention grain stored in provinces of European Russia. The federal intervention fund stopped selling grain on May 6th, 2012.

Russia's Monthly Grain Exports

Stocks:

Very strong grain exports in MY 2011/12 resulted in a depletion of Russia’s grain stocks, especially in the Southern and North Caucasus Federal Districts, the major grain exporting regions of Russia. According to Rosstat, by June 1, 2012, Russia’s grain stocks at farms and grain processing and trading enterprises and warehouses decreased from their post-harvest maximum of 48.7 MMT on October 1, 2011 to 16.8 MMT. This was 2.24 MMT less than on June 1, 2011. These stocks do not include stocks at private peasant farms and households, and the Russian State Statistical Service (Rosstat) usually includes estimates of stocks at these farms only when it corrects data in August. However the trend in stocks movement is clear and in the South of European Russia (Southern and North Caucasus federal districts) grain stocks dropped from 14.8 MMT on October 1, 2011 to 2.9 MMT on June 1, 2012, and the decrease was sharper than in the previous year when the grain export ban was in force.

The Ministry of Agriculture reported that despite lower than expected grain crop, the government does not expect a grain deficit as stocks are ample and include about 4.9 MMT of grain in the intervention. If necessary this intervention grain will be used for domestic price regulation.

Russia: Stocks of Grain in Agricultural, Storing and Processing Enterprices, Million Metric Tons


Russia: Stocks of Grain by Region, Million Metric Tons

Policy:

The Ministry of Agriculture decided to end grain commodity interventions for this marketing year (United Grain Company’s letter of June 19, 2012 #04-07/5298). During the course of intervention sales from April 4 through June 7, the Government sold 2.2 MMT for 11.88 billion rubles (approximately $360). In this period government sold 271,200 MT of milling wheat Class 3, 1,044,033 MT of milling wheat Class 4, 572,227 MT of fodder wheat Class 5, 207,741 MT of fodder barley, and 93, 287 MT of food rye.

The Government has not yet adopted the new Agriculture Development Program for 2013-2020, and adjusts it to mitigate the WTO effect. Proposed measures cover primarily support of animal production and large farms that have accumulated huge debts when investing in livestock production. As for support of crop production farms, the proposed measures are either temporary, such as extension of support of fertilizer and fuel prices through the end of CY 2012, or apply to all agriculture, such as partial financing of purchase of new equipment, support of investments into irrigation, and others. According to many industry specialists, these measures will not allow crop farmers to increase their own investments into production.

Grain Sales from the State Intervention Fund, 1,000 MT

Marketing:

Prices

Prices of wheat of milling quality continued rising all over Russia. In Southern European provinces (Rostov, Krasnodar, Stavropol) the start of harvesting put downward pressure on prices despite poor crop prospects, but then the rise of prices resumed.

Prices of Wheat Class 3, by Regions, Rubles


Prices of Wheat Class 4, by Regions, Rubles

July 2012

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