Report Highlights:

FAS/Moscow increased post's July 2015 grain production forecast by 5 million metric tons (MMT) to 102 MMT. The grain crop forecast includes 60.5 MMT of wheat (4.5 MMT higher than the July forecast), 16.5 MMT of barley (no change), 12.5 MMT of corn (up 0.5 MMT), 3,200 MMT of rye (up 0.2 MMT), 4.8 MMT of oats (down 0.2 MMT), 0.7 MMT of milled rice (1.06 MMT in rough weight – no change), and almost 3.5 MMT of other grains and pulses. FAS/Moscow forecasts grain exports in MY 2015/16 at 31 MMT, only 3 percent lower than the record 32 MMT exports in MY 2014/15, but higher than in any other marketing year in Russian history. The export forecast includes 23.5 MMT of wheat, 3.5 MMT of barley, 3.5 MMT of corn, and approximately 0.6 MMT of other grains and pulses.

General Information

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.

Executive Summary

FAS/Moscow increased post's July 2015 grain production forecast by 5 million metric tons (MMT) to 102 MMT. The grain crop forecast includes 60.5 MMT of wheat (4.5 MMT higher than the July forecast), 16.5 MMT of barley (no change), 12.5 MMT of corn (up 0.5 MMT), 3,200 MMT of rye (up 0.2 MMT), 4.8 MMT of oats (down 0.2 MMT), 0.7 MMT of milled rice (1.06 MMT in rough weight – no change), and almost 3.5 MMT of other grains and pulses.

FAS/Moscow increased its forecast compared with the July 2015 forecast based on better than previously forecast harvest for both wheat and corn crops:

  • The wheat crop is higher than previously forecast due to a larger harvested area that more than compensated for the yields that are somewhat smaller than last year. Conditions for wheat harvest were favorable almost all over Russia. However, yields are down in the Volga Valley and in some provinces of the Central Federal District (FD) due to spring and summer dryness;
  • The area sown to corn was larger than last year, and so far yields of corn this year have been higher than last year. However, as of October 23, 2015, farmers harvested only 1.9 million hectares, or 67 percent of corn area, so any snowfall in Central European Russia in late October could ultimately impact total yields.

FAS/Moscow forecasts grain exports in MY 2015/16 at 31 MMT, only 3 percent lower than the record 32 MMT exports in MY 2014/15, but higher than in any other marketing year in Russian history. The export forecast includes 23.5 MMT of wheat, 3.5 MMT of barley, 3.5 MMT of corn, and approximately 0.6 MMT of other grains and pulses. Wheat comprises the major portion of grain exports, and because of the good crop, wheat exports in MY 2015/16 may reach the highest level in the Russian history.

The government softened the terms for calculation of the "floating" export duty on wheat, and this also may stimulate Russian traders to increase wheat exports. In the beginning of October 2015, the government also increased the price offered for purchases of grain to the State Intervention Fund. However, intervention purchases based on the new prices have not yet begun and industry analysts estimate that these new prices may influence only wheat from markets in the Ural and Siberian regions, where it is difficult for farmers to gain access to foreign markets. Of course, Russian MY 2015/16 grain exports will also be influenced by external factors, such as global grain market prices and fluctuations in the Russian ruble to U.S. dollar exchange rate, which are not considered in the FAS/Moscow forecast.

Assuming grain exports at 31 MMT, FAS/Moscow forecasts feed consumption of grain at 35.5 MMT, 0.5 MMT higher than in MY 2014/15, and food, seed and industrial consumption of grain at 36 MMT, a 2 percent increase from last year. End of year grain stocks are forecast at the same level as last year.

Production

FAS/Moscow increased its July 2015 grain production forecast by 5 million metric tons (MMT) to 102 MMT. The grain crop forecast includes 60.5 MMT of wheat (4.5 MMT higher than the July forecast), 16.5 MMT of barley (no change), 12.5 MMT of corn (up 0.5 MMT), 3,200 MMT of rye (up 0.2 MMT), 4.8 MMT of oats (down 0.2 MMT), 0.7 MMT of milled rice (1.06 MMT in rough weight – the same), and almost 3.5 MMT of other grains and pulses.

The first official data on the Russian grain crop in clean weight may be published later in November 2015. So far the Russian Minister of Agriculture reported that the grain crop will be not less than 100 MMT, other sources estimate the grain crop at 103-104 MMT1.

Harvest Progress

According to the Russian Ministry of Agriculture, as of October 26, 2015, Russia harvested 105.0 million metric tons (bunker weight) of grain from 43.37 million hectares, or 97.8 percent of area planned for harvest (The Ministry of Agriculture data includes 1.43 MMT of grain harvested in Crimea from 495,000 hectares, including 844,200 MT of wheat from 270,300 hectares, 525,400 MT of barley from 192,300 hectares, and 2,100 MT of corn from 800 hectares, and 58,100 MT of other grains and pulses. This is not included in FAS/Moscow estimates). This includes 63.81 MMT of wheat from 25.44 million hectares, or 99.7 percent of area planned for harvest, 18.21 MMT of barley from 8.17 million hectares, or 99.6 percent of area planned for harvest, and 10.12 MMT of corn from 1.93 million hectares, or 70.8 percent of area planned for harvest. By the end of October almost all wheat and barley were harvested nearly everywhere in Russia. However, farmers continue harvesting corn, rice and other grains and pulses. The total grain harvest in 2015 is very similar to 2014: the area harvested is slightly more than in 2014, while the average grain yield is slightly smaller than in 2014. Wheat harvested area in 2015 is larger than last year, and despite somewhat smaller yields, the wheat crop is expected to be higher than last year. For barley, both the harvested area and the yields are lower than last year, and the total crop is expected to be lower than last year. Corn yields are higher than last year, and although the harvested area is lagging behind the harvest last year, corn production in 2015 is expected to be higher than last year, assuming that late–October snow in Central European Russia does not damage crops still to be harvested.

Winter Crop Sowing Status

As of October 23, 2015, Russian farmers planted 15.59 million hectares to winter crops that mainly include winter grains, although some portion of winter area is also sown to winter rapeseed. This area is 0.6 million hectares smaller than the winter grain area sown on the same date in 2014. However, it is still too early to make a forecast on the status of winter grain crops.

Trade

FAS/Moscow forecasts grain exports in MY 2015/16 at 31 MMT, only 3 percent lower than the record the MY 2014/15 exports of 32 MMT, but higher than in any other marketing year in Russian

history. The export forecast includes: 23.5 MMT of wheat, 3.5 MMT of barley, 3.5 MMT of corn, and approximately 0.6 MMT of other grains and pulses. Wheat comprises the major portion of grain exports, and its exports in MY 2015/16 may reach the highest level in the Russian history due to a good crop.

According to Russian Customs data, from July through September 2015, Russia exported 9.59 MMT of grain (including wheat flour in grain equivalent) and pulses. This compares to 11.66 MMT during the same period last year, and was the third largest export volume in Russian history. The Russian Grain Union estimates grain exports in October 2015 at 4 MMT, including 2 MMT of grain that were already exported in the first half of October.

According to official Customs data, from July through September 2015, exports of wheat, Russia's main exported grain, lagged behind wheat exports during the same months in 2014, 2013, and 2011, and was only 6 percent higher than exports during that period in 2012. Official data show that from July through September 2015, the main destinations of Russian wheat exports were Egypt (1.3 MMT), Turkey (0.9 MMT), and Iran (0.6 MMT). It is worth noting that due to the complexity of calculating the former wheat export duty that was in force from July through September 2015, some industry analysts estimate that actual exports of wheat in August and September were larger than reported by Customs data, and these uncounted volumes may be included in October and November, while actual exports in October and November might be smaller than reported by Customs. According to these analysts, total grain exports for the period from July through September 2015 were 11.4 MMT, including 8.7 MMT of wheat, which are almost the same volumes as the period July through September 2014. The softening of the wheat export duty in the beginning of October 2015, will likely stimulate wheat exports beginning October 2015.

Russian barley exports from July through September were 1.8 MMT, including 1.1 MMT exported to Saudi Arabia.

The marketing year for corn begins in October, and the bulk of corn exports is expected between October to December 2015. From July to September 2015, the last three months of corn marketing year 2014/15, Russia exported 0.5 MMT of corn. Total exports of corn in MY 2014/15 are 3.2 MMT, 24 percent less than in MY 2014/15.

Stocks

According to the Russian State Statistical Service (Rosstat), as of October 1, 2015, stocks of grain in agricultural enterprises and grain assembling and processing enterprises were 43.5 MMT. These stocks increased from September 1, 2015 by 11 percent along with progress of the grain harvest progress. Although these stocks were 1 percent lower than the grain stocks on October 1, 2014, this level is among the highest in the last 5 years. Grain stocks in the southern part of European Russia, Russia's major grain exporting area, are at the highest level, equal to those of October 2011, when stocks in this region also included grain from the 2010 crop that traders were not able to export because of the MY 2010/11 wheat export ban. Current high grain stocks this year in southern European Russia are primarily due to the abundant grain crop experienced in the region this year.

Policy

In October 2015, the Russian Government amended the formula for calculation of the floating wheat export duty and increased target prices for purchases of grain to the State Intervention Fund.

The export duty on wheat is still 50 percent of customs value, but the deductible portion of the wheat export duty was raised from 5,500 rubles to 6,500 rubles per 1 MT and the minimum amount of duty was decreased from 50 rubles to 10 rubles per 1 MT. Also, the duties placed on durum wheat and wheat planting seeds were lifted. Thus, the customs value threshold for wheat, when the minimum (10 rubles) duty will be applied, was raised from 11,000 rubles to 13,000 rubles per 1 MT. Industry analyst calculated that when the FOB price of wheat is approximately $200 per 1 MT, and the exchange rate of $1 is approximately 63 rubles the export duty will be minimal.

The prices for purchasing wheat to the State Intervention Fund were raised by 12 to 20 percent for milling wheat and from 2 to 5 percent for feed quality wheat, prices for food quality rye and fodder barley were raised by 16 percent. The price for corn remains unchanged.

Both the amended export duty and the increased intervention prices will likely increase the price of wheat in the domestic market. However, so far the impact of these two changes has not been significant. Industry analysts believe that traders had started anticipating both government measures in early September, and that prices traders were paying to farmers in late September and October 2015 already reflected these policy changes. The government will begin purchasing grain to the State Intervention Fund at the new prices on October 27, 2015.

In September 2015, the President of the Russian Federation instructed the government to prepare several documents concerning the development of the grain sector, including the following:

- The draft federal low "On Grain Commodity Warehouses" that, among other, will allow the use of grain stored in elevators and warehouses in commercial transactions of grain without physical movement of this grain. The draft shall be submitted to the Duma by March 1, 2015;

- Ministry of Agriculture, Ministry of Finance, and Ministry of Economic Development, together with professional unions and associations, shall prepare proposals on amending the system of government-supported insurance of agricultural crops (by December 15, 2015), and the long term strategy for development of Russian grain complex (by April 1, 2016);

- The Government shall consider the changes in the structure of the State Program for Development of Agriculture in 2013-2020 in order to include a sub-program on support of export of agricultural products. The proposals shall be prepared by December 1, 2015.

These recommendations outline the priority direction for government support of the Russian grain sector beginning 2016, but the influence of these expected documents on the grain sector will depend first on the scope of financing from the federal budget, which has not yet been increased.

Marketing

Domestic grain market prices increased during August and September 2015, despite good crop prospects. This increase was caused by renewd devaluation of the Rusisan ruble and the resulting profitability of grain exports. A slight reversal of the ruble devaluation in October 2015 stabilized grain prices, although at a relatively high level.

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Jul 2013

Jul 2014

Jul 2015

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

23399

23399

23636

23636

25700

25265

Beginning Stocks

4952

4952

5175

5175

6282

6282

Production

52091

52091

59080

59080

61000

60500

MY Imports

800

800

327

327

350

350

TY Imports

800

800

327

327

350

350

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

57843

57843

64582

64582

67632

67132

MY Exports

18568

18568

22800

22800

23500

23500

TY Exports

18568

18568

22800

22800

23500

23500

Feed and Residual

12500

12500

13000

13000

14000

13500

FSI Consumption

21600

21600

22500

22500

23000

23000

Total Consumption

34100

34100

35500

35500

37000

36500

Ending Stocks

5175

5175

6282

6282

7132

7132

Total Distribution

57843

57843

64582

64582

67632

67132

(1000 HA) ,(1000 MT)

Barley

2013/2014

2014/2015

2015/2016

Market Begin Year

Jul 2013

Jul 2014

Jul 2015

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

8024

8024

8803

8803

7800

8000

Beginning Stocks

726

726

932

932

1622

1622

Production

15389

15389

20026

20026

17500

16500

MY Imports

198

198

100

100

100

100

TY Imports

194

194

100

100

100

100

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

16313

16313

21058

21058

19222

18222

MY Exports

2681

2681

5336

5336

4500

3500

TY Exports

2762

2762

5500

5500

4000

3200

Feed and Residual

8300

8300

9200

9200

8700

8700

FSI Consumption

4400

4400

4900

4900

4800

4800

Total Consumption

12700

12700

14100

14100

13500

13500

Ending Stocks

932

932

1622

1622

1222

1222

Total Distribution

16313

16313

21058

21058

19222

18222

(1000 HA) ,(1000 MT)

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct. 2015

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2322

2322

2596

2596

2700

2700

Beginning Stocks

297

297

292

292

367

367

Production

11635

11635

11325

11325

13500

12500

MY Imports

52

52

50

50

50

50

TY Imports

52

52

50

50

50

50

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

11984

11984

11667

11667

13917

12917

MY Exports

4192

4192

2900

2900

4000

3500

TY Exports

4192

4192

2900

2900

4000

3500

Feed and Residual

6600

6600

7400

7400

8300

8000

FSI Consumption

900

900

1000

1000

1000

1000

Total Consumption

7500

7500

8400

8400

9300

9000

Ending Stocks

292

292

367

367

617

417

Total Distribution

11984

11984

11667

11667

13917

12917

(1000 HA) ,(1000 MT)