Report Highlights:

The Russian State Statistical Service (Rosstat) published preliminary data on crop production in 2013, with overall production of grains and pulses at 91.3 million metric tons, including 52.1 MMT of wheat, 15.4 MMT of barley, 10.7 MMT of corn, and 13.1 MMT of other grains and pulses. The total crop is 29 percent higher than in 2012. FAS/Moscow has increased the estimate for Russia’s grain exports in marketing year 2013/2014 from 20 MMT (November Update) to 21.6 MMT, including 16.0 MMT of wheat (1 MMT increase), and a record 2.5 MMT of corn (0.5 MMT increase). Exports in the first half of the marketing year have been very strong, and since July 1, 2013, through the end of December 2013, Russia has exported 16.36 MMT of grain and pulses - 21 percent higher than in the same period 2012. However, exports are expected to slow in the next couple of months due to seasonal factors, as well as less-competitive Russian prices. For 2014 production, as of December 20th, 2013 area for winter grain (including green feed - mostly rapeseed) was down 7 percent from that same time the previous year. This decline in area was primarily due to very wet weather in the early fall which severely delayed plantings.

Executive Summary:

According to preliminary official data from the Russian State Statistical Service (Rosstat), in 2013 Russia produced 91.3 million metric tons (MMT) of grain and pulses, including 52.1 MMT of wheat, 15.4 MMT of barley, 10.7 MMT of corn, and 13.1 MMT of other grains and pulses. The total crop is 29 percent higher than in 2012. Final official data will be published in late-February, but typically this final data has been very close to the preliminary data. Since July 1, 2013, through the end of December 2013, Russia has exported 16.2 MMT of grain and pulses, including 2.1 MMT were exported in December. This July – December 2013 export is 21 percent higher than in the same period 2012. Russian domestic wheat prices have stabilized at relatively high levels by mid-November, while foreign market prices of wheat have declined, making Russia’s wheat less competitive in the foreign markets. Industry analysts forecast significant decline in Russia’s grain exports in January – February 2014 not only because of seasonal factors (such as unfavorable weather in deep water and shallow water ports of the Southern European Russia), but also because of less-competitive prices. Following this slowdown in exports, there will likely be a recovery in export volumes in the spring of 2014 as a result of larger grain stocks than last year and improved weather conditions.

Because of high early-season exports, FAS/Moscow has increased Russia’s grain export estimate in marketing year 2013/2014 from 20 MMT (in the November Grain and Feed Update) to 21.6 MMT, including 16.0 MMT of wheat (a 1 MMT increase), and a record 2.5 MMT of corn (a 0.5 MMT increase). The estimate for barley exports is unchanged at 2.5 MMT, while exports of other grains and pulses are raised by 0.1 MMT to 0.6 MMT.

Production 2014

For 2014 production, as of December 20th, 2013 area for winter grain (including green feed - mostly rapeseed) was down 7 percent from the same time the previous year. This decline in area was primarily due to very wet weather in the early fall which severely delayed plantings. The Central Federal District was the most impacted by reduced plantings, with sown area down 18 percent, followed by the Southern Federal District and Volga Valley which both had planted area down 5 percent. In the North Caucuses Federal District, area planted was up slightly.

Trade

FAS/Moscow has increased the Russia’s grain export estimate in marketing year 2013/2014 from 20 MMT to 21.6 MMT, including 16.0 MMT of wheat (a 1 MMT increase), and a record 2.5 MMT of corn (a 0.5 MMT increase). The estimate for barley exports is unchanged - 2.5 MMT, while exports of other grains and pulses is raised by 0.1 MMT to 0.6 MMT.

Russia has exported 16.36 MMT of grain in July-December 2013, which is 21 percent more than in the same period last year. According to preliminary trade data1, exports include 12.56 MMT of wheat, 1.93 MMT of barley, 1.68 MMT of corn, and 0.2 MMT of other grains and pulses. Monthly exports in December 2013 were 2.2 MMT and included record monthly exports of corn at 681,830 metric tons (MT), which is 15.7 percent more than in November 2013 and almost 3 times more than in December 2012. However, industry analysts forecast a decrease of exports in the January – February 2014 timeframe to only 1.1-1.2 MMT per month. This will be due to several factors, including seasonal factors (such as unfavorable weather in deep water ports and ice in shallow water ports of the Southern European Russia) and less-competitive domestic prices of Russian wheat compared to world prices. Also, the Winter Olympics in Sochi in February of 2014 may also hamper railway and truck delivery and out-loading of grain to Novorossiysk and Tuapse deep water ports, which are close to Sochi, because of a general slowdown in all activities non-related to the Games. Following this slowdown, exports in the spring of 2014 will likely recover somewhat as a result of larger grain stocks compared to last year, and improved weather conditions for shipping logistics.

Grain import forecasts have remained unchanged. Wheat and flour imports (almost entirely from Kazakhstan) are expected to fall significantly from last marketing year as a result of much higher production in the Urals and Siberia. However, despite this increased production, imports from Kazakhstan in October and November 2013 were relatively high.

Stocks

As a result of the larger crop, Russia’s grain stocks at farms and at processing enterprises and collection centers (warehouses, county and regional elevators, terminals, etc.) increased by December 1, 2013, to 34.1 MMT (15 percent more than on December 1, 2012), of which stocks in the Southern European Russia were 8.5 MMT (35 percent more than on December 1, 2012). However, stocks of wheat at the assembling and processing enterprises were the lowest in the last 4 years, with the reason being possibly that processors are waiting for lower prices to complete purchases.

Policy

2013 grain intervention purchases into the State Fund took place through December 25, 2013. Since October 15, 2013, the Russian government purchased over 0.54 MMT of grain from farmers in Ural and Siberia, including 287,685 metric tons (MT) of milling wheat Class 3, 108,540 MT of milling wheat Class 4, 46,575 MT of feed wheat Class 5, and 101,250 MT of fodder barley. The total value of purchased grain is 3.2 billion rubles ($97 million). The average purchase prices have stabilized as of the beginning of December 2013, and the volumes of purchases have been reduced. Intervention purchases resumed on January 21st and 22nd, 2014, but interest was very low, and farmers only sold 5,400 MT of all grain on January 21st, and 7,965 MT on January 22nd to the Intervention Fund.

Marketing

Russia’s domestic grain prices have flattened since the end of November, and fluctuation have not been significant. However, in dollars these prices began slightly decreasing in January due to the strengthening U.S. dollar