Russia. Grain and Feed Update. Jul 2014 Aug. 1, 2014
FAS/Moscow increased the previous Russia total grain crop forecast for MY 2014/15 by 2 million metric tons (MMT) to 94 MMT. This includes 52 MMT of wheat, 16 MMT of barley, 13 MMT of corn, and almost 13 MMT of other grains and pulses. The increase is due largely to good weather and increased area planted with corn. Given these crop volumes, in MY 2013/14 Russia may export up to 26 MMT of grain, including 18.5 MMT of wheat, 2.7 MMT of barley, 3.5 MMT of corn, and approximately 0.8 MMT of other grains and pulses. For the first time in 2013/14, Russian exports of corn are estimated to exceed barley exports.
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. Production
FAS/Moscow increased the previous Russia total grain crop forecast for MY 2014/15 by 2 million metric tons (MMT) to 94 MMT1. This forecast includes 52 MMT of wheat (the same as in 2013), 16 MMT of barley (0.6 MMT increase from last year), 13 MMT of corn (1.4 MMT more than last year), and almost 13 MMT of other grains and pulses. Rainy weather in June in European Russia delayed winter crop harvest, but by the latter part of July 2014, harvest caught up with last year. So far the winter grain crop looks good, and despite somewhat lower area than last year, the winter grain crop may be equal or even slightly higher than in 2013. Harvesting of spring grain will not begin until the end of August. This year more land was given to corn, and generally corn has higher yields than either wheat or barley. Therefore, assuming normal summer weather in Russia’s major spring grain areas, the spring grain crop will likely be equal or higher than last year. Industry analysts estimate that the Russian grain crop in 2014 will range from 92 MMT to 99 MMT. The Russian Ministry of Agriculture forecasts the 2014 grain crop at 96.8 MMT, and recently Agricultural Minister Nikolay Fedorov reported that Russia’s grain crop may reach 100 MMT2.
According to Ministry of Agriculture (data as of the end of spring)3, total area sown in 2014 with grains and pulses is 46.2 million hectares, almost the same as last year. Winter wheat area is 0.3 million hectares less than in 2012, but has been almost offset by 0.25 million hectares, with an increase of spring wheat sown area. Area sown to Russian’s three major spring crops (wheat, barley and corn) increased by 0.8 million hectares. This includes an increase in spring wheat area by 248,000 hectares, or 2 percent, an increase in spring barley area by 36,000 hectares, or 0.4 percent, and a 9 percent increase in corn area from 2.44 million hectares in 2013 to 2.67 million hectares in 20144. Area sown to other spring grains and pulses decreased compared to last year, but there are no separate statistical data on sowing of these crops.
Siberia, Volga Valley and Central federal districts are major areas for production of spring grains. Harvest in these districts begins only in late August. In Siberia, 64 percent of spring area is sown with spring wheat, 13 percent is sown with spring barley, and the rest is other grain crops and pulses. Very little corn is sown in Siberia. In Volga Valley 40 percent of spring area is planted with spring wheat, and 35 percent – with spring barley. The share of corn area planted is less than 3 percent. Corn has always been the major spring crop in the Southern and the North Caucasus federal districts, and only recently began spreading into the Central federal district, and has now become one of the principal crops.
Due to a cold and rainy June in European Russia, harvest there began later than last year. The Ministry of Agriculture posted the first information on the 2014 harvest on June 23, 2014. The first separate data on the wheat harvest appeared only on July 14, 2014. However, by the latter part of July the crop harvested caught up with the crop harvested in 2013.As of July 21, 2014, Russian farmers harvested 31.6 MMT of grain, of which 1.1 MMT were harvested in the Crimea federal district, where harvesting began earlier than last year. Excluding the Crimea crop, Russia’s grain harvest as of July 21, 2014, was 30.6 MMT, compared to 30.7 MMT on the same date in 2013.
FAS/Moscow forecasts Russia’s grain exports in MY 2014/15 at 25 MMT, 2 percent lower than in MY 2013/14. Exports in MY 2014/15 will include 18 MMT of wheat, 2.7 MMT of barley, 3.5 MMT of corn, and 0.8 MMT of other grains and pulses. Some decrease in exports is due to decreased world prices of wheat, Russia’s major exported grain. In addition, strong domestic demand for feedstuffs, coupled with tight stocks, has led to higher, and thus more attractive, domestic prices. Although, these prices began falling when harvest started in June 2014. Instability of the Ruble to Dollar exchange rate may significantly correct exports, as happened in spring 2014, when the low ruble stimulated grain exports despite high domestic prices. One factor that could impact this forecast, however, is that if the Russian ruble further weakens over the course of 2014, it could yield increased market opportunities for domestically produced poultry at the expense of imports.)
During the period July 2013 through June 2014, Russia exported 25.5 MMT of grain (including pulses and flour in grain equivalent), the second highest level of grain exports in Russian history after MY 2011/2012. The record exports of MY 2011/2012 followed a 2011 export ban. Thus, traders ended up exporting crop from 2010 and 2011 after the ban was lifted.
For the first year in Russia’s history corn has become the second major exported grain, moving barley to third place. Russia’s corn exports in July 2013 through June 2014 exceeded 4.2 MMT. The corn marketing year begins in October. Corn exports for the period October, 2013 through June, 2014 were 4.0 MMT. Usually very little corn is exported in July and August. Therefore, Post has estimated that corn exports in MY 2013/14 at 4.1 MMT.
According to the Russian State Statistical Service (Rosstat), as of July 1, 2014, at the beginning of marketing year 2014/15, Russia’s grain stocks were at 11.1 MMT, 13 percent lower than on the same date last year, and the lowest carry-in stocks since marketing year 2010/116. Grain stocks in the Southern European Russia (Southern and North Caucasus federal districts), Russia’s major exporting area, were only 3.6 MMT, 38 percent less than on July 1, 2013, and also the lowest since beginning of MY 2010/11. The drastic decrease in grain stocks in the Southern and North Caucasus federal districts in the end of MY 2014/15 were due to relatively low carry-in stocks and intensive exports in MY 2013/14.
Financing of crop producers in 2014 is still lagging behind last year. As of July 18, 2014, farmers were able to borrow only 113 billion rubles (approximately $3.2 billion) in short-term loans, 12 percent less than last year. Assistance from the Russian federal government allows farmers to borrow from state-owned banks that use the mechanism of state interest rate subsidies. As of July 2014, Rosselkhozbank had loaned farmers 86.3 billion rubles ($2.5 billion), 8 percent less than last year, and Sberbank lent 26.8 billion rubles ($0.8 billion), 21 percent less than on the same date last year. The banks are concerned by farm debt and the growth of delinquent loans.
In MY 2013/2014, the mechanism of “buy-back” purchases of grain from the Intervention Fund started working. The market prices of grain in spring and in June 2014 were higher than in the fall 2013, and Russian farmers bought back 230,000 metric tons (MT) of 536,000 MT of 2013 crop that they sold in the fall 2013 to the Intervention Fund. The average buy-back purchase price of grain was 6,600 – 7,200 Rubles per 1 metric ton7. Meanwhile the market price of grain during that period varied from 8,500 to 9,000 rubles per metric ton. Farmers were able to commercially market the “buy-back” grain from Intervention Fund stocks. The volumes of these buy-back purchases are still too small to seriously influence the grain market, but they show that this mechanism began working, for mainly the benefit of small-size farmers. Generally, larger-size farmers have not utilized the Intervention Fund.
In March 2014, the Ministry of Agriculture announced the price point at which the Intervention Fund would begin purchases of the 2014 crop8. However, industry analysts do not expect such interventions to begin before October 2014.
Grain prices started falling in the beginning of MY 2014/2015, driven by a good harvest forecast in Russia, and decreasing wheat prices in international markets