Highlights

FAS/Moscow's forecast for Russia's total grain production remains almost unchanged from its September forecast – 114.6 million metric tons (MMT) compared with 114.5 MMT. The 2016/2017 crop will be the largest in Russian (post USSR) history. The wheat crop forecast remains 72.0 MMT, the same as the official forecast, and will be the largest wheat crop in Russian history. Post increased its barley forecast by 0.3 MMT to 18.0 MMT, matching the official forecast. At the same time, Post decreased its corn crop forecast by 0.5 MMT to 13.0 MMT. This forecast is 1 MMT lower than the official USDA forecast. Production of other grain crops and pulses is forecast at 11.6 MMT. Total grain exports are forecast at 38 MMT, including 29.0 MMT of wheat (1 MMT lower than the official USDA forecast), 4.0 MMT of barley, 4.0 MMT of corn, and 1 MMT of other grains and pulses.

Executive Summary

FAS/Moscow's forecast for Russia's total grain production remains almost unchanged from its September forecast – 114.6 million metric tons (MMT) compared with 114.5 MMT. The 2016/2017 crop will be the largest in 26 years. The wheat crop forecast remains 72.0 MMT, the same as the official USDA forecast. This wheat crop will be the largest wheat crop in Russian (post USSR) history. Post increased its barley forecast by 0.3 MMT to 18.0 MMT based on the progress of the barley harvest. This forecast matches the official USDA forecast. At the same time, the progress of the corn harvest, as of October 12th, was lagging behind last year, and Post decreased its corn crop forecast by 0.5 MMT to 13.0 MMT. This forecast is 1 MMT lower than the official USDA forecast. Production of other grain crops and pulses is forecast at 11.6 MMT.

FAS/Moscow increased its total grain exports forecast by 1 MMT to 38 MMT, including 29.0 MMT of wheat (1 MMT lower than the official USDA forecast), 4.0 MMT of barley (matching the official USDA forecast), 4.0 MMT of corn (0.5 MMT lower than the official USDA forecast), and 1 MMT of other grains and pulses. Despite the bumper wheat crop, wheat exports from July to September, 2016, were lower than in the same period last year. The decline in exports was primarily due to lower exports to Egypt. Industry analysts estimate that since Egypt has restored a 0.05 percent tolerance for Ergot in wheat, Russia's exports of wheat will exceed exports last year by the end of 2016. However, Post's forecast is more cautious. Also, Post's corn export forecast is lower than the official forecast based on a lower forecast for the corn crop.

The Russian Ministry of Agriculture increased its grain crop production forecast from 113 MMT (September forecast) to 115 - 116 MMT in mid-October. The Ministry reported that given this high crop, the “comfortable" volume of grain exports will be 40 MMT.

As of October 12, 2016, Russian farmers harvested 113.4 MMT of grain (bunker weight), 14 percent more than on the same date last year, from 43.3 million hectares, this area is almost 4 percent larger, year-over-year (y-o-y). The Ministry of Agriculture reported that as of October 12th almost 93 percent of all Russia's area sown to grain was harvested. Harvest progress, by major grains, follows (all production is in bunker weight):

Wheat

The wheat crop as of October 12, 2016 was harvested from 26.8 million hectares (approximately 98 percent of wheat planned for harvest), and reached 74.7 MMT. This is almost 20 percent and 8 percent more than on the same date last year, respectively:

  • In the Southern and North Caucasus federal districts (FD) the wheat harvest was completed, with the wheat crop totaling 22.2 MMT and 8.5 MMT, respectively. On the same date last year, wheat production in these districts was 18.7 MMT and 7.7 MMT.
  • Average yields were 4.22 MT/HA and 4.17 MT/HA in 2016, respectively, compared with 3.76 MT/HA and 3.84 MT/HA in 2015.
  • In the Central FD wheat was harvested from 97 percent of area planned for harvest, and the wheat crop was 15.0 MMT compared with 12.5 MMT last year. Average yield was 3.79 MT/HA compared with 3.39 MT/HA in 2015.
  • In the Volga Valley FD wheat was harvested from 97 percent of area planned for harvest with the crop totaling 14.2 MMT compared with 9.9 MMT last year. The average yield was 2.15 MT/HA compared with 1.74 MT/HA in 2015.
  • In Ural FD the wheat harvest was also nearly completed with 98 percent of planned area harvested. Due to the larger planted area, the wheat crop was 3.9 MMT, almost 0.5 MMT larger than last year. Although, yields were almost the same: 1.68 MT/HA in 2016 compared with 1.64 MT/HA in 2015.
  • In Siberia FD the wheat crop was harvested from 98 percent of area, and was 10.2 MMT compared with 9.47 MMT in 2015. The average yield in 2016 was 1.58 MT/HA compared with 1.51 MT/HA in 2015.

There are no comprehensive data on the quality of the wheat crop, but industry analysts consider that overall the quality of wheat is worse than last year, especially in the Central FD where, due to heavy rains in July and August, the wheat crop lost protein. In some cases grain started to germinate.

However, given the overall size of the wheat crop, the quantity of good quality milling grain will not be less than last year.

Barley

As of October 12, 2016, Russian farmers harvested 18.5 MMT of barley (16.5 last year) from 7.9 million hectares (the same area as last year). This captures planned for harvest. In the Southern and North Caucasus federal districts, the barley (primarily winter barley) harvest was completed with a barley crop of 2.84 MMT and 1.15 MMT, respectively and yields of 2.81 MT/HA and 3.76 MT/HA, respectively. In 2015, the barley crop in these federal districts was MMT and 0.98 MMT:

  • In the Central FD barley was harvested from 94 percent of the area planned for harvest, with a crop of 5.5 MMT. On the same date in 2015, the harvest was 6.0 MMT.
  • In the Volga Valley FD barley was harvested from 97 percent of planned area, and the crop was MMT, compared with 4.5 MMT in 2015.
  • In the Ural FD and in Siberia FD, barley was harvested form 98 and 99 percent of area planned for harvest, respectively, and the crop was 13.1 MMT and 2.2 MMT, respectively. This compares to 1.2 MMT and 2.0 MMT, respectively, in 2015v

Corn

As of October 12, 2016, 5.6 MMT of corn were harvested from 1.04 million hectares, or 36 percent of area planned for corn for harvest. On the same date last year, corn was harvested from 1.4 million hectares with a crop of over 6.9 MMT harvested:

  • In the Southern FD, farmers harvested 3.2 MMT of corn from 0.62 million hectares, that was 64 percent of area planned for the corn harvest. On the same date last year, farmers harvested 3.8 MMT from 0.8 million hectares.
  • In the North Caucasus FD, farmers harvested 1.0 MMT of corn from 0.17 million hectares, or 32 percent of the area planned for the corn harvest. On the same date last year, farmers in this federal district harvested 0.9 MMT of corn from 0.2 million hectares.
  • In the Central FD, corn was harvested from only 102,000 hectares, or 11 percent of area sown to corn, and the crop was 0.7 MMT compared with 1.9 MMT harvested on the same date last year from 311,000 hectares.
  • In the Volga Valley FD, 0.6 MMT of corn were harvested from 147,000 hectares, or 39 percent of planned area. On the same date in 2015, farmers harvested 0.3 MMT of corn from 71,000 hectares.

Industry analysts maintain that corn can be harvested for a much longer period than other grains. However, the harvest this year is still late, and the fall weather may cause more damage to the corn crop in the South and the Central parts of European Russia than was seen last year

Winter Crop Sowing

Winter planting continues at approximately the same pace as last year. As of October 12, 2016, Russia planted 14.71 million hectares to winter crops. At the same time in 2015, 14.77 million hectares had been planted to winter crops. In most provinces where winter crops are sown, the soil moisture level is better this year than last year. Sowing of winter crops is lagging behind last year in the North Caucasus FD (minus 28 percent) and the Southern FD (minus 1 percent). In the Central FD and the Volga Valley FD, the other two major winter crop producing areas in Russia, winter crop sowing is moving faster than last year by 2 percent and 9 percent, respectively. Winter crop sowing in the North-Western, Ural and Siberian federal districts is also moving faster this year compared to last year, but farmers in these districts primarily produce spring crops. According to estimates from the Russian Ministry of Agriculture, the total winter crop area, which includes winter grains and some fodder crops, will be 16.9 million hectares.

Exports

FAS/Moscow increased the total grain exports forecast by 1 MMT to 38 MMT, including 29.0 MMT of wheat (1 MMT lower than the official USDA forecast), 4.0 MMT of barley (matches the official USDA forecast), 4.0 MMT of corn (0.5 MMT lower than the official USDA forecast), and 1 MMT of other grains and pulses. Despite the bumper grain crop and the historic high wheat crop, Russia's grain exports from July to September 2016, were lagging behind y-o-y. Industry analysts attribute this to the absence of wheat exports to Egypt from August to September, due to Egypt's temporary zero Ergot requirements for wheat. Analysts estimate that since Egypt has restored a 0.05 percent tolerance for Ergot in wheat, Russia's exports of wheat will exceed exports last year by the end of 2016. Final 2016 exports of grain from Russia are projected to reach, or even exceed, the 40 MMT target set by the

Ministry of Agriculture for grain exports in MY 2016/17. However, Post's forecast is more cautious. Despite the expected restoration of wheat exports to Egypt and the decrease of Russia's wheat export duty to zero until July 2018, Russia's wheat exports are constrained by the world vs domestic grain prices and the Ruble to the U.S Dollar exchange rate. As of October 2016, both factors have influenced Russia's wheat exports. World wheat stocks are high and world wheat prices are low. The U.S. Dollar to Ruble exchange rate continues to be volatile, with a slight strengthening of the Ruble during the first part of October when the exchange rate decreased from 64 Rubles to 63 Rubles.

According to preliminary Russian Customs data, from July through September 2016, Russia exported 9.4 MMT of grain. This is 3 percent less than in the same period last year. However, since Egypt returned to a 0.05 tolerance for Ergot in wheat, exports to Egypt resumed in late September, and will possibly be reported in Russian Customs' September data. According to the Ministry of Agriculture, by October 6, 2016, Russia's total grain exports from the beginning of marketing year (July 1, 2016) reached the same level as exports in the same period last year: 10.4 MMT, including 8.6 MMT of wheat, 1.3 MMT of barley, 0.48 MMT of corn, and 0.05 MMT of other grains. In the same period last year Russia exported 10.8 MMT of grain, including 8.4 MMT of wheat.

Industry analysts estimate grain exports in October 2016 at 3.8-4.0 MMT, almost 14 percent more than in October 2015. They also estimate that the total grain exports during the period July to October will not be less than last year and that Russian grain exports for the period November to December, especially wheat exports, will surpass last year

Stocks

Due to the early harvest and the record high grain crop, Russia's grain stocks, as of September 1st, increased from August 1st nearly 15 MMT to 45.4 MMT. According to reports from the Russian State Statistical Service, this is the highest September 1st grain stocks level in the last 7 years. Another factor contributing to these large grain stocks was the slowing of Russia's grain exports during the period July to August 2016. In Southern European Russia (Southern and North Caucasus federal districts), Russia's major grain exporting federal districts, grain stocks also peaked. Given that the wheat crop in 2016 is expected to be the highest in Russian history, it is consistent that September 1, 2016 wheat stocks at assembling and processing enterprises were also the highest September 1st stock levels in the last 7 years.

Policy

Starting in September 2016, Russia began purchasing grain to the State Intervention Fund. At the end of September, the Russian Government temporary decreased the wheat export duty to zero. These measures were aimed to stimulate grain exports and support domestic grain prices. However, the effect of these measures has been rather limited. The total amount of grain that may be purchased to the State Intervention Fund is estimated at a maximum of 2 MMT by the end of MY 2016/17, and the wheat export duty, at the current domestic price and the current exchange rate, did not play a significant role in traders' decisions.

Grain procurement intervention

The Government purchases grain to the Intervention Fund through a Dutch type auction: the declared price is a ceiling and grain is purchased from farmers who offer grain at a lower price. Thus, the actual price is lower than the declared procurement price for grain.

In the fall of 2015, when grain prices started increasing, the Government switched to a single intervention price, regardless of where in Russia the wheat was grown. Prior to that, the intervention prices varied dependent on where the wheat was grown. Since last fall, the declared intervention price for each type of wheat has been the same for all Russian territories. In MY 2016/17, intervention purchases were conducted primarily in Siberia, Ural, Volga Valley from producers located far from major export points in the Black Sea and Azov-Don: Omsk oblast (Siberia), Kurgan oblast (Ural), Orenburg, Nizhniy Novgorod, Saratov, Samara, Ulyanovsk oblasts and, Bashkortostan Republic (Volga Valley), and Volgograd oblast.

So far interventions have been attractive to farmers because the market prices for wheat in Siberia, Ural, and Volga Valley are lower than the procurement price Since September 21, 2016 there have been eight sessions for the purchasing of grain from the 2016 crop to the State Intervention Fund. The last session was on October 12, 2016. During these interventions, the Government purchased 410,920 MT of grain for 3.99 billion rubles, including 138,645 MT of milling wheat Class 3, 190,736 MT of milling wheat Class 4, 50,085 MT of feed quality wheat Class 5, and 31,455 MT of fodder barley.

Zero export duty on wheat

On September 26, 2016, the Russian Government decreased the wheat export duty to zero through Government Resolution No. 966 “On introduction of changes to the export customs tariffs for commodities exported from the Russian Federation outside the boundaries of the member-states of the Custom Union Agreement." According to this resolution, the basic export duty, which is “50 percent minus 6,500 Rubles per 1 Metric Ton, but not less than 10 Rubles per 1 Metric Ton" is not changed. However during the period September 23, 2016 to July 1, 2018, the export duty on wheat exported from Russia will be zero. According to industry analysts, at the present contract prices for wheat and the current exchange rate, the export duty on wheat was only 10 rubles per 1 MT. At this level the export duty did not play a significant role on export prices, but it prevented some traders from concluding long term, wheat export contracts. However, the zero export duty is temporary, and the export duty mechanism is still in force. According to the Russian Minister of Agriculture, Tkachev, in situations where the U.S. Dollar is strong and Russia has a bad wheat crop, Russia may return to charging the wheat export duty.

Marketing

There is no aggregate information on the quality of Russian wheat in 2016. Industry analysts report that despite the abundant wheat crop in European Russia, volumes of good quality wheat that meet the criteria of Class 3 and 4, and have high protein content, are approximately equal to last year. The demand for good quality wheat remains high, and is stimulated both by traders for exports and by domestic processors. Thus, domestic prices for wheat Class 3 continue to increase. Domestic prices of wheat Class 4 are also increasing, but at a slower pace. By the beginning of September, prices of wheat Class 5, which is considered feed quality wheat, reached the bottom, but began increasing. This increase is largely driven by the domestic demand for feed.

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

May 2015

Jul 2016

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

23636

23636

25577

25577

26600

26600

Beginning Stocks

5177

5177

6285

6285

5601

5601

Production

59080

59080

61044

61044

72000

72000

MY Imports

328

328

815

815

500

500

TY Imports

328

328

815

815

500

500

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

64585

64585

68144

68144

78101

78101

MY Exports

22800

22800

25543

25543

30000

29000

TY Exports

22800

22800

25543

25543

30000

29000

Feed and Residual

13000

13000

14000

14000

15500

16000

FSI Consumption

22500

22500

23000

23000

23000

23000

Total Consumption

35500

35500

37000

37000

38500

39000

Ending Stocks

6285

6285

5601

5601

9601

10101

Total Distribution

64585

64585

68144

68144

78101

78101

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

May 2015

Oct 2016

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2596

2596

2671

2671

2800

2800

Beginning Stocks

290

290

348

348

266

266

Production

11325

11325

13168

13168

14000

13000

MY Imports

46

46

50

50

50

50

TY Imports

46

46

50

50

50

50

TY Imp. from U.S.

1

1

0

0

0

0

Total Supply

11661

11661

13566

13566

14316

13316

MY Exports

3213

3213

4400

4400

4500

4000

TY Exports

3213

3213

4400

4400

4500

4000

Feed and Residual

7200

7200

8000

8000

8600

8100

FSI Consumption

900

900

900

900

900

900

Total Consumption

8100

8100

8900

8900

9500

9000

Ending Stocks

348

348

266

266

316

316

Total Distribution

11661

11661

13566

13566

14316

13316

Barley

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

May 2015

Jul 2016

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

8803

8803

8042

8042

8000

8000

Beginning Stocks

904

904

1533

1533

836

836

Production

20026

20026

17083

17083

18000

18000

MY Imports

39

39

61

61

50

50

TY Imports

16

16

60

60

50

50

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

20969

20969

18677

18677

18886

18886

MY Exports

5336

5336

4241

4241

4000

4000

TY Exports

5807

5807

3700

3700

4000

4000

Feed and Residual

9200

9200

8900

8900

9100

9100

FSI Consumption

4900

4900

4700

4700

4800

4800

Total Consumption

14100

14100

13600

13600

13900

13900

Ending Stocks

1533

1533

836

836

986

986

Total Distribution

20969

20969

18677

18677

18886

18886

Rye

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

May 2015

Jul 2016

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1853

1853

1249

1249

1200

1200

Beginning Stocks

344

344

264

264

130

130

Production

3279

3279

2084

2084

2300

2300

MY Imports

5

5

5

5

5

5

TY Imports

5

5

5

5

5

5

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

3628

3628

2353

2353

2435

2435

MY Exports

114

114

48

48

50

50

TY Exports

121

121

40

40

50

50

Feed and Residual

550

550

225

225

150

150

FSI Consumption

2700

2700

1950

1950

2100

2100

Total Consumption

3250

3250

2175

2175

2250

2250

Ending Stocks

264

264

130

130

135

135

Total Distribution

3628

3628

2353

2353

2435

2435

Oat

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

May 2015

Jul 2016

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

3077

3077

2829

2829

2700

2700

Beginning Stocks

230

230

289

289

197

197

Production

5267

5267

4527

4527

4700

4700

MY Imports

1

1

0

0

0

0

TY Imports

1

1

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

5498

5498

4816

4816

4897

4897

MY Exports

9

9

19

19

10

10

TY Exports

14

14

20

20

10

10

Feed and Residual

3700

3700

3000

3000

3000

3000

FSI Consumption

1500

1500

1600

1600

1600

1600

Total Consumption

5200

5200

4600

4600

4600

4600

Ending Stocks

289

289

197

197

287

287

Total Distribution

5498

5498

4816

4816

4897

4897

Rice, Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

Russia

Jul 2014

May 2015

Jul 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

196

196

199

199

203

203

Beginning Stocks

84

84

101

101

88

88

Milled Production

682

682

722

722

725

725

Rough Production

1049

1049

1111

1111

1115

1115

Milling Rate (.9999)

6500

6500

6500

6500

6500

6500

MY Imports

228

228

190

190

190

190

TY Imports

228

228

190

190

190

190

TY Imp. from U.S.

1

1

0

0

0

0

Total Supply

994

994

1013

1013

1003

1003

MY Exports

163

163

190

190

180

180

TY Exports

163

163

190

190

180

180

Consumption

and Residual

730

730

735

735

745

745

Ending Stocks

101

101

88

88

78

78

Total Distribution

994

994

1013

1013

1003

1003

Millet Market Begin Year

Jul 2014

May 2015

Jul 2016

Russia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

397

397

440

440

400

400

Beginning Stocks

0

0

0

0

0

0

Production

489

489

565

565

500

500

MY Imports

0

0

0

0

0

0

TY Imports

0

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

489

489

565

565

500

500

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

225

225

320

320

250

250

FSI Consumption

264

264

245

245

250

250

Total Consumption

489

489

565

565

500

500

Ending Stocks

0

0

0

0

0

0

Total Distribution

489

489

565

565

500

500

TY Exports

0

0

0

0

0

0

Feed and Residual

225

225

320

320

250

250

FSI Consumption

264

264

245

245

250

250

Total Consumption

489

489

565

565

500

500

Ending Stocks

0

0

0

0

0

0

Total Distribution

489

489

565

565

500

500