Report Highlights: 

Kazakhstan’s 2014 grain harvest is lower than last year, with the FAS/Astana estimate for wheat production at 13.0 million metric tons (MMT), down from last year’s 13.9 MMT. FAS/Astana estimates wheat exports in the 2014/15 marketing year at 6.0 MMT, down 1.5 MMT from last year but still far below the levels of 2011/12 of nearly 12 MMT. Delays in harvesting, and onset of rain and snow during the harvest resulted in lower production figures and high moisture content. These factors are also expected to negatively impact Kazakhstan’s exports.

Production 

Kazakhstan’s 2014 grain harvest is lower than last year, with the FAS/Astana estimate for wheat production at 13.0 million metric tons (MMT), down from last year’s 13.9 MMT. The most recent estimate for all grain production from the Kazakh Ministry of Agriculture (of which wheat typically accounts for 80 percent) was raised to 16 MMT from a previous forecast of 17 MMT. 

Harvesting during the third quarter of October was complicated by rains and snow in almost all northern grain producing regions. Aktobe, Zhambyl, West-Kazakhstan and South-Kazakhstan regions, with relatively small harvesting area, finished harvesting. However these regions were able to start harvesting earlier than northern regions. 

This year almost all regions, except North and West Kazakhstan, experienced a decrease in yield compared to the previous year. The average yield for Kazakhstan decreased from 1.31 tons per hectare in 2013, to 1.23 tons per hectare in 2014. At the same time, the yield in the North-Kazakhstan region was 1.54 tons per hectare (up 10%), in the Akmola region the yield was 1.2 tons per hectare (down 2%), and in the Kostanay region the yield was 1.04 tons per hectare (down 8%). 

In the Kostanay region, thanks to heavy rains and onset of snow during harvest, managed to harvest only 76% of planted area. Late seedlings in early summer and a lack of rain delayed the vegetation period for almost a month. July rains allowed seedlings to mature, but then subsequent heavy rain and relatively low temperatures required moving the date for harvest to later dates. More than 900,000 hectares of wheat and 300,000 hectares of oilseeds still remain under crops, according to Kostanay regional administration. The harvesting campaign began on August 25th and was planned to be completed in September or early October. Unfortunately, because of heavy rainfalls, the grain supplied to local elevators has a high moisture content, up to 30%. 

Trade 

FAS/Astana estimates wheat exports in the 2014/15 marketing year at 6.0 MMT, down 1.5 MMT from last year but still far below the levels of 2011/12 of nearly 12 MMT. Delays in harvesting, and onset of rain and snow during the harvest resulted in lower production figures and high moisture content. These factors are expected to negatively impact Kazakhstan’s exports. 

Although shipments to the South (Central Asia) may continue to increase, there are a number of factors which are expected to limit any larger increase in total Kazakh exports this year. These include: 

--Lack of export subsidies: While in previous years of large harvests, the Kazakh Government provided transportation subsidies (up to $40 per metric ton for grain going through Russia or to China). This year there have been no announcements of any such subsidies, and with Kazakhstan trying to join the WTO, the future of these types of subsidies are questionable. Higher transportation costs of transporting Kazakh grain will likely make the grain less competitive compared to previous years. 

--Chinese market: In September 2014, the Kazakh Government grain operator “Food Contracting Corporation” signed a contract with Chinese COFCO to ship 20,000 tons of Kazakh wheat. This contract is part of the framework agreement, which includes Kazakh supplying 100,000 tons of wheat supply to China during 2014-2015. 

-- Iranian market: In October 2014, the Governmental Trading Corporation of Iran expressed interest in increasing imports from Kazakhstan to 2 million tons of wheat during the next two to three years. At the same time, Kazakhstan has expressed an interest in developing transit shipments through Iran to utilize the Persian Gulf for onward shipments. However, so far during the first nine months of 2014, the Aktau grain terminal on the Caspian Sea has transshipped only 538,000 tons of wheat and barley. 

Unlike Kazakhstan’s exports to Central Asia, Kazakhstan’s exports to Russia have sharply fallen. In September 2014, Kazakhstan’s exports to Russia were five times less than in September 2013. 

Stocks 

According to the State Statistics Service, Kazakhstan grain stocks as of September 1, 2014 were at 3.8 MMT of grain, including 3.2 MMT of wheat. These volumes are less than last year’s stock levels of 4.4 MMT of grain and 3.9 MMT of wheat. 

Prices 

In September, the Food Contracting Corporation (The Kazakh Government grain operator) announced procurement prices for 3d class wheat and 2d class barley. The 3d class wheat price is 35,000 tenge per MT including VAT, and 33,950 tenge per MT without VAT (with a gluten content of 23-24% and test weight no more than 730 g/l.) Wheat with gluten content higher than 25% and test weight 750 g/l price is 36,000 tenge including VAT and 34,920 tenge without VAT. Food Contracting Corporation plans to procure 1 MMT. 

Barley 2 class price is 24,000 tenge per ton with VAT and 23,280 tenge without VAT. In then first half of October, prices have increased as a result of possible losses and low quality grain