Russia. Grain and Feed Update - Attaché Report Oct. 30, 2014
Based on the officially reported data on grain harvest progress, FAS/Moscow increased its forecast of Russia's total grain crop in MY 2014/15 by 2 million metric tons (MMT) to 101 MMT. The forecasted crop includes 57.5 MMT of wheat, 19 MMT of barley, 11.5 MMT of corn, and almost 13 MMT of other grains and pulses. Given these crop volumes and the volatility of ruble exchange rate Russia may export 28 MMT of grain, including 21 MMT of wheat, 4 MMT of barley, 2.5 MMT of corn, and from 0.5 to 0.8 MMT of other grains and pulses.
NOTE: USDA unofficial data excludes Crimean production and exports. However, as of June 2014, Russian official statistics (ROSSTAT) began incorporating Crimean production and trade data into their official estimates. Where possible, data reported by FAS Moscow is exclusive of information attributable to Crimea.
FAS/Moscow increased the previous (September 2014) Russia total grain crop forecast for MY 2014/15 by 2 million metric tons (MMT) to 101 MMT. This crop will be the second highest crop in the last 20 years. This forecast includes 57.5 MMT of wheat (1.5 MMT increase from the previous forecast), 19 MMT of barley (1.5 MMT increase from the previous FAS/Moscow forecast), 11.5 MMT of corn, and almost 13 MMT of other grains and pulses. Given that cold, rainy weather with spells of snow and frost, started earlier in the Central, Ural, Volga Valley and West Siberia federal districts, there is little chance that farmers will be able to harvest more wheat and barley after October 22, 2014. It is possible that some grain harvested by small farmers has not yet been reported, and the final bunker weight of harvested wheat and barley will be slightly higher than the current Ministry of Agriculture's data. Domestic market prices of wheat and barley are going up, which may mean that these additional volumes of yet not-reported grain are not significant. FAS/Moscow forecasts crop in clean weight; and for wheat and barley assumes that clean weight will be only 4 percent lower than the bunker weight. Cold rains, frost and snowfall in the third quarter of October will hamper the corn harvest in the Central federal district. Therefore, FAS/Moscow decreased its previous forecast by 1.5 MMT to 11.5 MMT.
According to the Ministry of Agriculture reports, (which include Crimea) as of October 22, 2014, Russian farmers harvested 106.3 MMT of grain from 42.4 million hectares, or 94 percent of sown area. Harvested wheat crop was 60.9 MMT. Excluding Crimean production, Russia's harvested grain crop as of October 22, 2014 was 105.15 MMT, including 60.2 MMT of wheat. During harvest the harvested crop is given in bunker weight, that is 4-7 percent higher than the final clean weight.
According to the Russian Ministry of Agriculture, the harvested grains and pulses crop, by major federal districts (FD), as of October 22, 2014, is as follows:
- Farmers in the Southern FD (area of winter grains and corn) harvested almost 27.3 MMT of grain from 7.6 million hectares, or 97.5 percent of all area planned for harvest (Area planned for harvest is sown area minus losses and area transferred for grazing ). The average yield was 3.57 MT per hectare, compared to 3.01 MT/HA in 2013;
- Farmers in the North Caucasus FD (area of winter grains and corn) harvested 10.2 MMT from 2.8 million hectares, or 94.0 percent of area planned for harvest. The average yield was 3.68 MT/HA, compared to 3.11 MT/HA in 2013;
- In the Central FD (area of primarily winter grains and corn) farmers harvested 26.1 MMT from 7.2 million hectares, or 95.2 percent of area planned for harvest. The average yield was 3.64 MT/HA, compared to 3.03 MT/HA in 2013;
- In the Volga Valley FD (primarily spring grains) farmers harvested 22.1 MMT of grain from 12.2 million hectares, or 98.4 percent of area planned for harvest. The average yield was 1.81 MT/HA, compared to 1.60 MT/HA on the same date last year;
- Farmers in the Ural FD (spring grains) harvested almost 4.3 MMT of grain from 2.49 million hectares, or72.6 percent of area planned for harvest. The average yield was 1.72 MT/HA compared to 1.47 MT/HA in 2013;
- Farmers in the Siberia FD harvested 13.7 MMT of grain from 9.1 million hectares, or 92.2 percent of area planned for harvest. The average yield was 1.50 MT/HA, compared with 1.73 MT/HA in 2013.
FAS/Moscow forecast of grain exports from Russia in MY 2014/15 remains the same as in the previous report: 28 MMT. However, FAS/Moscow increased its forecast of barley exports by 1 MMT from 3 to 4 MMT, and decreased the forecast of corn exports by 1 MMT from 3.5 MMT to 2.5 MMT. Changes in forecasts are based on forecast production data which is higher than in the last report for barley production forecast and lower for corn production forecast. Russia may also export from 0.5 to 0.8 MMT of other grains and pulses.
In the first 3 months of MY 2014/15 (July – September 2014) Russia exported over 11.62 MMT of grain, including 9.85 MMT of wheat, 1.28 MMT of barley and 0.31 MMT of corn. Low domestic market prices in July and August 2014, expectations of bumper grain crop, and the depreciation of the ruble against the U.S. dollar, were the main reasons for high exports in July – September 2014. Export forecasts are based on the current price situation in the world markets and the current exchange rate of ruble to the U.S. Dollar. This may change significantly in the coming months given the high volatility of this exchange rate in MY 2014/15, the stimuli to export, and the price competitiveness of Russian grain, especially wheat.
Due to good grain crop this year, grain stocks in Russia continued to grow, and were the second highest in the last 5 years. In spite of unprecedentedly high exports, grain stocks in the Southern European Russia, Russia's major grain exporting district, were close to high stock levels on the same date in 2010 and 2011. The stock levels in 2010 and 2011 were at record high levels because then export ban of August 2010 kept stocks in this exporting region at the highest levels. Wheat stocks at assembling and processing enterprises has also improved, although these stocks were still lower than levels in 2010 and 2011.
The Ministry of Agriculture began purchasing grain from the 2014 crop for the Intervention Fund on September 30, 2014. Initial purchases were made from Siberian and Ural farmers. Sessions are held twice a week. Over the course of eight trade sessions, the Intervention Fund purchased 177,235 MT of grain for 971.37 million rubles (approximately $24 million). This includes 13,095 metric tons of milling wheat Class 3, 25,920 MT of milling wheat Class 4, 19,575 MT of Class 5 feed quality wheat, 25,785 MT of food quality rye, and 92,860 MT of barley. The average purchase price for milling wheat Class 3 and for feed quality wheat Class 5 remained the same as were set by the Order of the Minister of Agriculture in March 2014: 6,400 Rubles per MT and 6,000 rubles per MT, respectively. The average purchase price of milling wheat Class 4 was higher than the price specified in the March Order of the Minister of Agriculture by almost 200 rubles and increased from 6,200 rubles in the beginning of Intervention Fund purchases to 6,450 rubles. Since the beginning of Intervention Fund purchases through October 22, 2014, the Intervention Fund prices were lower than the actual market prices in Ural and Siberia, so farmers were decreasing sales of their grain to the Intervention Fund.
In European Russia, the major exporting region, wheat prices in rubles continue to increase, driven by high export demand and concerns about the wheat crop in Siberia. There exists a continued incentive to export due to the depreciation of the ruble and stagnant U.S. dollar grain prices