Report Highlights:

FAS/Astana forecasts Kazakhstan's wheat production in 2015/16 at 12.8 MMT only slightly less than the levels estimated for 2014/15 on the background of heavy rains in May, which delayed planting and left some areas unplanted. Decreased planting area may be offset by a slight increase in yields making for a leveling of production. Larger carry-in stocks are expected to keep Kazakhstan's exports flat, although the Government of Kazakhstan continues to look optimistically toward export possibilities.

Production

FAS/Astana forecasts Kazakhstan's wheat production in 2015/16 at 12.8 MMT, slightly less than the 12.9 MMT estimated for 2014/15, and significantly down from the record 22.7 MMT in 2011. This 2015/16 estimate is based on Kazakhstan's continuing strategy of crop diversification and the decrease in planted area because of the heavy rains in May. However, the crop is still in its early growth stage, and the level of rains in August will ultimately be the deciding factor for the size of production.

Wheat production volumes in 2015 depend on a numbers of factors:

  • Northern Kazakhstan is subject to sharp weather fluctuations for example, after plentiful rains a drought can rapidly occur.
  • Within the conditions created by this continental climate, a one "right" technology strategy doesn't succeed.
  • During recent years, many farmers have used no-till technology with no utilization of mechanical soil treatments. Those farmers who utilized the no-till technology in the fall of 2014, found that in the spring there was poor soil moisture absorption and the soil was more solid. Similarly, evaporation seemed to take longer. A longer evaporation period is good for a dry spring, but it causes problems within over saturated supplied soil season.
  • Phosphorous fertilizers are highly recommended to farmers at current abnormal conditions, because they speed up the maturation of the plantings. Usage of such fertilizers has increased in Kazakhstan.

Sowing in the spring of 2015 in Akmola, Kostanay and North-Kazakhstan regions was affected by a number of factors:

  • In northern Kazakhstan, grains matured late in September. However, rains started in mid-September and lasted through the end of fall and continued as snow. This fall precipitation was combined with low average daily temperatures, providing no chance for normal maturation and harvesting.
  • The rainy fall in 2014, snowy winter and late spring made soil over saturated. Additionally, experts reported that conditions were abnormal due to the combination of over saturated soil and low average daily air temperatures when sowing was initiated.
  • By the end of April 2015, farmers had approximately ten days of hot spring weather to harvest fields left unharvested from the 2014 season. (Note: Kazakhstan has reported some success with spring harvest of wheat left in the field during winter, dependent on moisture content and weather conditions.) This spring harvesting effort took away some machinery and labor resources from the spring sowing initiative. However, in mid-May, at the beginning of the sowing campaign, all the wheat producing areas experienced heavy rains. As a result, the major sowing was delayed until after May 25-27. Rains with storms continued through early June in northern Kazakhstan, affecting the wheat producing areas. Some areas received 20-30 mm during one rain storm. Due to the heavy rains, sowing was halted until hot weather conditions arrived in May 25-27. Although the Ministry of Agriculture reported that sowing in northern Kazakhstan finished on June 10th, some farmers continued sowing as late as June 20th.
  • Some experts believe that delays in planting in northern Kazakhstan reached one month, which has a significant negative impact on vegetation development. However, hot weather in July in the northern grain producing regions, helped late plantings reach their vegetative stage. Despite an abundance of moisture in the soil, the majority of plantings are reported to be in good condition, giving farmers hope for good yields. Currently, harvest is now re-scheduled for October 2015. If October 2015 is wet, then it will be hard to avoid low-quality and losses.

Below, please see the 2015 sowing details for Kostanay, North-Kazakhstan and Akmola regions.

Kostanay region

A wet May and local rains in June affected plant development. Currently plants are at the vegetation stage and look good. Sixty-two percent, or 2.5 million hectares, of the grain plantings appear to be in a good condition. Crops estimated to be in satisfactory condition are 1.5 million hectares or 37% and 28,000 hectares or 0.7% is estimated as in bad condition (17,300 hectares in Zhitikara rayon, 10,500 hectares in Uzunkol rayon). Local authorities have commented that the situation improves daily. The temperatures in June and so far in July have been higher than normal with precipitation lower than average. This can have a negative impact on crops, particularly those which were planted late.

North-Kazakhstan region

Experts from the North-Kazakhstan region estimate, that 15-20% of the officially reported planted area has actually been left unplanted. This is because farmers were not able to plant due to heavy rains in May, pre-sowing treatment and the need to complete the left-over harvest. North-Kazakhstan farmers continued to plant well into the middle of June because machinery was not able to work on the wet ground. Experts confirm, that farmers well-equipped with machinery were able to complete planting on time. But farmers with insufficient machinery were only able to complete 50 to 60% of their sowing. The unplanted fields were left fallow. Because of the heavy rains in May, there now is a great demand for herbicides to manage weeds. Additionally, farmers have confirmed that the incidence of Wheat Rust has increased due to the high moisture level in the soil and the abundance of pests. Farmers have noted that the 2015 sowing season was the hardest they've seen in the last 30 years. Some farmers had to choose the driest parts of the fields for planting. For instance, they planted half or quarter of the field and returned later – after the field had dried out- to plant the remainder of the field. Due to heavy rains, weeds have been abundant, requiring farmers to actively apply herbicides.

Akmola region

The Akmola region expected to plant grains and pulses over 4.196 million hectares, including spring wheat on 3.7 million hectares, oilseeds on 268,000 hectares and feeding crops on 566,000 hectares. The Akmola region expected 15,000 tractors, 17,000 planters and 1,026 sowing machinery to the planting of 3.2 million hectares within 18 working days. However renovation of outdated machinery in the region was slow. For instance during the 1st quarter of 2015, farmers received only 17 tractors, 20 planters and 4 sowing machines. Over the last four years, only 9% of machinery renovation has been completed.

Area: In mid-April, the Kazakh Ministry of Agriculture released numbers for the 2015 sowing season. The total planting area was largely unchanged (up 0.3 percent) at 21.5 million hectares, but the gradual shifting of land from wheat into other feed crops has continued. Total wheat area fell again this year to 12.1 million hectares. Since 2009, wheat area has declined a total of 18 percent. Oilseed area is down 6 percent from 2.3 million hectares in 2014. This is the first slight decrease of oilseeds area, but overall, planted oilseed area has tripled since 2007. FAS/Astana forecasts wheat planted area at 11.6 million hectares, 2 percent less from the 2014/2015 estimate of 11.8 million hectares.

Kazakhstan sowing plans for 2015,1,000 hectares

Crop

2014 actual

2015 forecast

2015 to 2014

Change

%

Total planted area

21,462.5

21,533.0

70.5

100.3

Including spring sowing

18,749.5

18,547.8

-201.7

98.9

Grains and pulses

15,302.5

15,162.3

-140.2

99.1

Wheat

12,391.8

12,156.5

-235.3

98.1

Corn for grain

127.3

126.3

-0.8

99.4

Rice

97.6

89.1

-8.5

91.3

Other grains

2,685.8

2,790.2

104.4

103.9

Oilseeds

2,300.4

2,165.9

-134.5

94.2

Cotton

127.5

113.8

-13.7

89.3

Sugar beats

2.0

11.8

9.8

590.0

Vegetables

138.2

138.0

-0.2

99.9

Horticulture

89.1

85.0

-4.1

95.4

Feeding crops

3,316.2

3,665.1

348.9

110.5

Consumption

Food, seed, and industrial (FSI) consumption for wheat is expected to remain unchanged in marketing year (MY) 2015/2016 at 4.8 MMT. Although flour consumption is expected to grow along with population growth, seed use is forecast to continue to fall as planted area shifts away from wheat. Fuels/industrial production is not a significant consumer of grain in Kazakhstan. Other industrial use (primarily for spirits production) is expected to remain flat.

Feed use of wheat in MY 2015/2016 is forecast to be flat. Although wheat remains the most fed grain in Kazakhstan for livestock, most of the increase in feeding in future years is expected to be in barley and other feed grains and grasses, due to the government's strategy to increase area to these crops.

Feed use of barley in MY 2015/2016 is forecast at 1.8 MMT, higher from 1.6 MMT in MY 2014/2015 as more and more barley is used for feeding in the livestock industry.

As part of the continuous strategy of crop diversification and creation of domestic value–added, currently there are 3 projects for oilseeds processing facilities under consideration by the Kazakh Ministry of Agriculture. The total capacity of these projects would be 1.2 million tons of processing, which equates to roughly half of Kazakhstan's oilseeds production. These projects are not yet launched, but if these projects become operational, they will affect the industrial consumption numbers.

The Kazakhstan Statistics Committee reports, that as of July 1, 2015, 90% of wheat is used for food consumption, 2% for seeds and 8% for feed. However, for the same period in 2013, food consumption was 96% largely because of the bumper production in 2012/2013.

Barley consumption has remained pretty flat over the last three years, including. The barley consumption pattern is as follows: 37% for food, 6% for seeds and 57% for feed.

Flour market update

According to the Millers Union of Kazakhstan, in 2015 there are 250 mills officially registered. In 2010, there were 383 mills. Despite the decrease in the number of mills, Kazakhstan reached a historical record of flour exports at 2.3 million tons.

The Millers Union of Kazakhstan estimates total country milling capacity at 11-12 million metric tons per year. However the volume of domestic consumption is estimated at 2.5 million metric tons and the volume of the Kazakh export markets is currently 3.5 million metric tons. As a result, Kazakh mills operate at only 50% capacity. In 2014, the mills in the Kostanay, Akmola and North-Kazakhstan regions together produce 44% of all flour. Mills in the South-Kazakhstan region, which is not a wheat producing region, produce 22% of flour. Experts explained that mills in the South-Kazakhstan region, which borders with Uzbekistan, purchase wheat in the northern part of Kazakhstan, mill the wheat locally and then mainly export flour to Uzbekistan, reducing transportation costs.

Kazakhstani millers believe that the new flour fortification procedures will provide the potential to increase flour exports to Central Asian countries, as some of the Central Asian countries (Tajikistan, Afghanistan, Kyrgyzstan) are on the way to introduce legal requirements for the fortification of flour.

Stocks

The grain stock levels in Kazakhstan started to increase slightly following the last three years of decline. Grain and wheat stocks, as of July 1.2015, are 30% higher in 2015 compared to 2014 stocks. According to the Kazakhstan Statistics Committee, grain stocks increased to 5.2 MMT (compared to 4.0 MMT the same time last year) and wheat stocks increased to 4.7 MMT (compared to 3.5 MMT the same time last year).

Barley stocks increased to 367,000 metric tons or 30% (compared to 283,000 last year).

Meanwhile, oilseed stocks continue to increase. As of July 1.2015, oilseeds stocks reached 321,000 metric tons (compared to 206,000 MT last year). This is the highest historical level for oilseed stocks. This increase is largely attributable to rapeseed and mustard seed stocks, which have doubled from last year.

The Kazakhstan Ministry of Agriculture reports, that the country's grain storage capacity, as of April 2015, reached 25 million metric tons. This includes 44% (11 million tons) of on-farm storage capacity.

Elevators which are up to 40 to 45 years old have outdated technological and drying equipment. They are unable to accept wet grain in big volumes and as a result, farmers must wait in long lines. This contributed to the delay in harvesting in 2014. Kazakhstan is looking to an increase in on-farm storage capacity and drying technologies as possible solutions to improve yields. "Argentinian bags" are under consideration as a possible method to increase on-farm storage capacity. For instance during 2014 in the Kostanay region, farmers launched 8 grain storage facilities for a total capacity of 153,000 tons and in 2015 another 12 grain storage facilities for 155,000 tons are expected.

Kazakhstan grain storage capacity as of April 2015, 1,000 MT

Region

Total storage capacity

Including

Grain elevators capacity

On-farm storage

AKMOLA

6,007.9

3,905,1

2,102,8

AKTOBE

765.5

540,0

225,5

ALMATY

685.2

203,2

482,0

EAST-KAZ

1,137.0

522,8

614,2

ZHAMBYL

512,6

30,0

482,6

WEST-KAZ

790,6

624,8

165,8

KARAGANDA

614,1

190,1

424,0

KOSTANAY

6,804,0

3,873,4

2,930,6

KYZYLORDA

288,1

156,5

131,6

MANGYSTAU

122,0

122,0

-

PAVLODAR

900,3

190,3

710,0

NORTH-KAZ

6,359,6

3,677,0

2,682,6

SOUTH-KAZ

166,4

73,9

92,5

TOTAL

25,153,3

14,109,1

11,044,2

Trade:

For the 2015/16 marketing year, FAS/Astana forecasts wheat exports at 6.0 MMT, the same level as in 2014/15. Although production is expected to be slightly lower, beginning stocks will be higher. As a result total wheat supply is forecasted to be only 15 TMT lower than the estimate for 2014/15. Exports to Russia comprises only about 10% of Kazakh wheat exports this marketing year, as Kazakhstan continues to exports mainly to Central Asian countries and Iran.

Grain exporters confirm that Kazakhstani exports in MY 2014/2015 were affected by the poor quality of wheat produced. The 2014/2015 Kazakh crop had a malty flavor, lower test weight and lower protein content. Although traditional Central Asian markets continued to import Kazakhstani wheat in MY 2014/15, alternate markets were covered by less-expensive, Russian wheat. Additionally, domestic prices in the 2014/15 MY season, were higher than in international markets, which made Kazakh wheat less competitive.

Customs data on wheat exports for the period January-May 2015 show that 80% of Kazakh exports went to Central Asian countries and 10% to Iran. Kazakhstan continues to ship quality samples to China as part of on-going negotiations to develop the export market to China. During the period January-May 2015, exports to China totaled 31,319 metric tons.

The Customs data for Kazakh barley exports for the period of January-May 2015 show that 82% of barley exports went to Iran.

The Customs data for wheat flour exports for the period of January-May 2015, show that 46% of exports went to Uzbekistan and 41% went to Afghanistan.

EAEU statistics shows, that during the period January-May 2015, Kazakhstan imported 35,478 MT of wheat from Russia. Also, EAEU statistics show that during the period January-May 2015, Kazakhstan imported 20,310 MT of barley from Russia and exported 1 MT of barley to Russia.

Railway exports infrastructure

The Kazakh Government continues to increase export potential for Kazakh grain through export infrastructure development programs by building railway connections, which will help to shorten distances within Kazakhstan to the export markets.

In 2014 new railway lines were launched between railway stations "Zhaskazgan-Beineu" and "Akralyk-Shubarkol". These connections allowed two small cities which previously were transit dead-ends, Arkalyk (in the Kostanay region) and Zheskazgan (in the Karaganda region), to be in the middle of transit routes between Asia and Europe.. Direct rail connections between Beineu station (in the Mangistau region), Shalkar station (in the Aktobe region) and Saksaul'skaya (in the Kyzylorda region) and Arkalyk city (in the Kostanay region) and Zhenkazgan city shortened the distance of shipments from West to East and from North to South of Kazakhstan and extends Kazakhstan transit opportunities.

These new connections increase Kazakhstan's transit potential of the transportation corridors from China to Russia and Europe. The "Zhaskazgan-Beineu" connection provides the shortest way from Central Kazakhstan to the Aktau port on the Caspian Sea, to the border with Turkmenistan and the Persian Gulf countries. The "Akralyk-Shubarkol" connection provides access from Central Kazakhstan to Russia and further to Western Europe. Another "Korgas-Zhetygen" connection will shorten the distance between China and the southern region of Kazakhstan by 550 km. Thanks to these connections the transit of cargo from China to Central Asian countries will become shorter by an average of 1.5-2.5 days.

The Aktau port on the Caspian Sea plays an important role in the international transportation corridors North-South between Saint-Petersburg in Russia to Astrakhan and then to the Amirabad port in Iran and back. Also, the Aktau port connects cargo transiting from China to European countries via transit connections, described above in this section.

The only Aktau port in Kazakhstan, which is located on the Caspian Sea, currently has 11 silos for storage capacity of 22,500 tons and an additional 6 silos each with 10,000 tons of storage capacity for grain is expected to be launched in the second half of 2015 as part of Aktau port capacity extension. This improvement will increase the transshipment capacity to 1.5 million tons of grain per year, 2.5 times more than the existing 600,000 tons of transshipment capacity.

Prices:

The Food Contracting Corporation announced procurement of wheat Triticum aestivum L. of 3rd class from the 2015 harvest by spring-summer financing at the preliminary set price of 20,000 tenge ($107) as a conditional price per 1 metric ton under the second-tier bank guarantee. According to these arrangements, the farmer must ship the relevant volumes of wheat by December 1, 2015 with a 3% discount rate off the procured price, set by the Government of Kazakhstan in the fall. This price serves as a preliminary price in the spring, and the final purchase price will be set by the Food Contracting Corporation in the fall of 2015.

Wheat and barley prices have decreased from January through and May 2015 as a result of a higher supply on the domestic market. Further, 3rd class wheat prices at the Russian border decreased nearly $20 per metric ton to approximately $212/MT since January 2015. Barley prices at the Port of Aktau decreased $26/MT to approximately $222/MT. However during the period May-June 2015, prices increased 4%, and reached $220 per MT for class 3 wheat with 23-24% gluten content.

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Sep 2014

Sep 2014

Sep 2015

Kazakhstan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

12954

12954

11923

11800

11500

11600

Beginning Stocks

2935

2935

1988

1988

2784

2584

Production

13941

13941

12996

12996

13500

12755

MY Imports

12

12

600

400

25

30

TY Imports

12

12

600

400

25

30

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

16888

16888

15584

15384

16309

15369

MY Exports

8100

8100

6000

6000

6000

6000

TY Exports

8000

8000

6000

6000

6000

6000

Feed and Residual

2000

2000

2000

2000

2000

2000

FSI Consumption

4800

4800

4800

4800

4800

4800

Total Consumption

6800

6800

6800

6800

6800

6800

Ending Stocks

1988

1988

2784

2584

3509

2569

Total Distribution

16888

16888

15584

15384

16309

15369

(1000 HA) ,(1000 MT)

Barley

2013/2014

2014/2015

2015/2016

Market Begin Year

Jul 2013

Jul 2014

Jul 2015

Kazakhstan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1837

1837

1909

2000

2000

2000

Beginning Stocks

158

158

197

207

219

239

Production

2539

2539

2412

2412

2600

2550

MY Imports

0

10

10

20

10

20

TY Imports

0

10

10

20

10

20

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

2697

2707

2619

2639

2829

2809

MY Exports

500

500

500

500

500

500

TY Exports

575

575

500

500

500

500

Feed and Residual

1700

1700

1600

1600

1800

1800

FSI Consumption

300

300

300

300

300

300

Total Consumption

2000

2000

1900

1900

2100

2100

Ending Stocks

197

207

219

239

229

209

Total Distribution

2697

2707

2619

2639

2829

2809

(1000 HA) ,(1000 MT)