Tags: Russia | Wheat | Crop | grain

Russia's Wheat Crop Forecast to be Lowest in Nine Years

Thursday, 30 August 2012 08:05 AM

Drought-stricken Russia will have less wheat to supply domestic and export markets this season than it did in the 2010/11 crop year, when the government shocked markets with a snap decision to ban exports, a leading Russian grain analyst said.

Andrei Sizov Sr., chief executive of the SovEcon consultancy, said Russia's total wheat supply was likely to be around 9 million tonnes less than it was in 2010/11 due to a combination of a lower harvest and lower stocks.

SovEcon has cut its wheat harvest forecast to 38 million tonnes from 39 million, he told a gathering of grain producers, buyers and traders on Thursday.

"The wheat harvest will be less than it was in 2010, when, I remind you, it was 41.5 million tonnes," Sizov said.

"This is the lowest level in nine years," he added.

The reduced forecast reflected a deterioration of yields in a widespread drought.

A rapid succession of cuts in harvest estimates by the government and leading analysts has prompted market speculation the government could limit exports again.

Deputy Prime Minister Arkady Dvorkovich, due to hold a meeting of the government's food security commission on Friday, has said Russia may consider protective tariffs but not before the end of this calendar year.

Interfax news agency said Deputy Agriculture Minister Ilya Shestakov reiterated on Thursday that the government did not intend to ban exports.

"There is no need to talk about it," Shestakov was quoted as saying.

Sizov said he did not exclude the possibility of export limits but that, among other likely scenarios this year, Russia's domestic prices could outpace world markets to keep grain in the country.

SovEcon also cut Russia's overall grain harvest forecast to 70.5 million tonnes from its previous estimate of 71-72.5 million. It now expects Russia to harvest 13.8 million tonnes of barley and 6.8 million tonnes of maize.

Sizov said Russia's grain harvest could be less than 70 million tonnes if the maize harvest comes in below expectations.

As for wheat, the harvest will decrease in almost all Russian regions this year, with only the Central region near its 2011/12 level, according to SovEcon.

The wheat harvest in the south is expected to fall by 7.5 million tonnes to 15.2 million, in the Volga region by 3.5 million tonnes to 6.5 million, and in the Urals region to fall by 3 million tonnes to 2 million, the lowest level since 1998.

Siberia's wheat crop may fall by 4 million tonnes to 6 million, the lowest level since 1970.

A tight wheat balance may force the government to sell off a large part of its 5 million tonnes of intervention stocks to keep domestic prices down, leaving it to start 2013/14 with heavily depleted stocks.

"The government will have to sell a significant part of its resources and to decrease it to 2 million tonnes," Sizov said, adding that would destabilize the market.

The Russian government may start to sell from its intervention stock in December, Shestakov was quoted as saying by Interfax.

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Thursday, 30 August 2012 08:05 AM
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