Highlights

FAS/Astana forecasts Kazakhstani wheat production in MY 2017/2018 at 13.0 Million Metric Tons (MMT), 2 MMT less than in MY 2016/2017, as wheat sown area is expected to fall, reducing harvested area. Kazakhstani wheat exports are forecast to remain flat in MY 2017/2018 at 7.0 MMT. FAS/Astana forecasts Kazakhstani barley production in MY 2017/2018 at 2.6 MMT, significantly less from the barley production estimate for MY 2016/2017 (3.2 MMT) on the background of active Government support of the oilseeds crops production this year.

PRODUCTION

FAS/Astana forecasts Kazakhstani wheat production in MY 2017/2018 at 13.0 Million Metric Tons (MMT), about two MMT less than in MY 2016/2017, as wheat sown area is expected to fall, reducing harvested area. FAS/Astana forecasts Kazakhstani barley production in MY 2017/2018 at 2.6 MMT, significantly less than the barley production estimate for MY 2016/2017 (3.2 MMT) due to active government support of oilseeds crops production this year.

Weather conditions during planting season were most favorable for the northern regions of Kazakhstan.

There were a few, short rain showers, which had little impact on the planting works.

Water deposits at the depth of one meter are expected to reach optimal levels. In the northern areas of Kazakhstan, soil was freezing from 52 to 150 centimeters deep, in the Aktobe region – 33-135 cm, in East Kazakhstan – 20-79 cm, in Akmola and Karaganda regions – 89-1278 cm. The soil defrosted during the second half of April, which is 6-8 days later than last year. The optimal planting period for the planting of spring wheat crops in the West-Kazakhstan and the Aktobe regions is expected to be the third week of April through the first week of May. However, this year in some parts of the Aktobe region, planting was recommended only during the second week of May because of the late defrosting of the soil. In northern regions, such as Kostanay, North-Kazakhstan, Akmola and Pavlodar, farmers were encouraged to complete planting by the end of May, the same as in the Karaganda region. In the East-Kazakhstan region, the Weather Service recommended that farmers finish grain planting no later than the second week of May.

During May, the average monthly air temperature was considered normal in the Atyrau, Mangistau, West-Kazakhstan, Aktobe and East-Kazakhstan regions. Temperatures in the rest of the country temperature were higher than normal.

Precipitation in May was higher than normal in the North-Kazakhstan, Kostanay, Akmola, Aktobe, Karaganda and Kyzylorda regions, as well as in the mountain areas of Eastern Kazakhstan. May precipitation levels in the South-Kazakhstan, Zhambyl and Almaty regions were lower than normal.

Total planning area in 2017 will reach 4.4 million hectares. Grain and pulses crops will be planted on 3.1 million hectares, including wheat on 2.4 million hectares. Oilseeds crops will be planted on 712,200 hectares, which is 200,100 hectares more than last year; feeding crops will be at 513,700 hectares.

The Ministry of Agriculture reported on May 31, 2017 spring sowing works totaled 12.5 million hectares for spring grain crops and 2 million hectares for oilseeds crops.

CONSUMPTION

Wheat:

Food, seed, and industrial (FSI) consumption for wheat is expected to remain unchanged in marketing year (MY) 2017/2018 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.

Feed use of wheat in MY 2017/2018, is forecast flat. Wheat remains the most fed grain in Kazakhstan for livestock. However, most of the increase in feeding in future years is expected to be in barley and other feed grains and grasses because of the government’s strategy to increase area to these crops.

As of June 1, 2017, nearly 84 percent of wheat is used for food consumption, 11 percent for seeds and 5 percent for feed. A year ago wheat consumption was nearly identical to the 2016 data, showing 80 percent for food, 15 percent for seeds and 5 percent for feed.

Barley:

In MY 2017/2018, feed use of barley is forecast at 1.7 MMT, based on the stable demand from the domestic livestock industry in Kazakhstan.

The structure of Kazakhstani barley consumption remains largely unchanged at 33 percent for food, 19 percent for seed and 47 percent for feed. However, in 2017 stocks are up 139,000 tons, or 36 percent, compared to 2016 stocks.

Flour Mill Industry Update

Flour millers of the Kostanay region are concerned, that the Kostanay region has excessive, unused milling capacity. All Kazakhstani demand for flour could easily be met by one mill in the Kostanay region. In 2011, three out of every four wagons of wheat flour were exported to Uzbekistan - the largest consumer of Kazakhstani wheat flour. However, Uzbekistan is actively developing its milling capacity and has significantly decreased purchases of Kazakhstani wheat flour. At the same time, Uzbekistan established an excise tax on wheat flour imports. Similarly, Tajikistan has gradually decreased imports of flour and increased imports of wheat. And, Tajikistan set an 18 percent VAT rate for flour imports and 10 percent for wheat imports. Kyrgyzstan cancelled its VAT on imported wheat.When the Russian Ruble to Kazakhstani Tenge exchange rate is 5.5, Russian millers actively purchase forage wheat, barley, oats and even wheat flour from the Kostanay region. Millers are optimistically that opportunities in the Chinese market will continue to grow.

STOCKS

Wheat:

The Kazakhstan Statistical Agency reported on June 1, 2017 that Kazakhstani grain stocks reached 6.5 MMT, 30 percent more than in 2016. The increase was mostly attributable to higher wheat stocks, which are 5.6 MMT (or 30 percent) higher than wheat stocks on June 1, 2016 (4.3 MMT).

Barley:

Barley stocks have remained nearly flat during the last three years.

Kazakhstani wheat exports are forecast to remain flat in MY 2017/2018 at 7.0 MMT. Kazakhstani grain exports analysis show a number of regional market developments that have affected exports at the end of the previous marketing year and the current marketing year:

• Iran continues its agricultural outsourcing strategy with the target of 10,000 hectares of land in Kazakhstan.

• Stable exports to China during the last four months could be an indication of further development of the Chinese market.

• Wheat flour exports to Central Asian countries continue to grow, however import duties affect millers’ margins.

• Kazakhstan’s wheat exports to Afghanistan slightly decreased during January-April 2017, mainly because of Afghanistan’s shift to wheat flour imports instead of wheat imports.

• During five months of 2017, the Akbiday Grain Terminal on the Caspian Sea has transshipped 143,600 tons of grain, continuing to transship relatively small amounts comparing to a pick season in December 2016.

From January to April 2017, Kazakhstan exported 1.1 million tons of wheat. These exports were mainly to Central Asian countries (76%) and China (12%).

Eurasian Economic Union Trade:

From January to March 2017, Kazakhstan exported 105,546 tons of wheat, 7,559 tons of barley and 15,767 tons of wheat flour within the Eurasian Economic Union (EAEU) countries, showing growth between 25 to 540 percent.

At the same time, Kazakhstan imported 893 tons of wheat, 232 tons of barley and 304 tons of wheat flour. This is nearly five times the import rate during the same period last year.

POLICY

The Kazakhstani Government revised the subsidy support programs for fertilizers, seed and agricultural machinery. The final interest rate for sowing works dropped to six percent, compared to nine percent last year. Moreover, the GOK significantly decreased the paperwork requirements for loan applications. The new subsidy mechanism for fertilizer has a total budget of $41 million and will allow farmers to choose better quality fertilizers regardless of the country of origin. Last year, 85 fertilizer brand names were used while this year the number of brands reached 156. The Ministry of Agriculture recently reported that mineral fertilizer applications this year are expected to reach 150 percent more than last year, reaching 407,000 tons. However, this still represents only 14 percent of the country’s demand for mineral fertilizers.

In 2017, subsidized support for the use of original and elite crop seeds was renewed. In order to improve wheat quality, the Kazakhstani Government increased the subsidy volume three fold, allocating $24 million to the program. It has been projected that this will increase the use of quality seeds 150 percent over last year.

The Kazakhstani Ministry of Agriculture, at their traditional planting briefing stated that chemical treatment on dangerous pests and quarantine objects were done on 1.8 million hectares area.

Wheat

Wheat

2015/2016

2016/2017

2017/2018

Market Begin Year

Sep 2015

Sep 2016

Sep 2017

Kazakhstan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

11571

11571

12373

12437

11500

11500

Beginning Stocks

3245

3245

2559

2559

3934

3934

Production

13748

13748

14985

14985

13000

13000

MY Imports

66

66

90

90

50

60

TY Imports

66

66

90

90

50

60

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

17059

17059

17634

17634

16984

16994

MY Exports

7600

7600

6800

6800

7000

7000

TY Exports

7600

7600

6800

6800

7000

7000

Feed and Residual

2100

2100

2100

2100

2100

2100

FSI Consumption

4800

4800

4800

4800

4800

4800

Total Consumption

6900

6900

6900

6900

6900

6900

Ending Stocks

2559

2559

3934

3934

3084

3094

Total Distribution

17059

17059

17634

17634

16984

16994

Yield

1.1881

1.1881

1,2111

1,2049

1.1304

1.1304

Barley

Barley

2015/2016

2016/2017

2017/2018

Market Begin Year

Jul 2015

Jul 2016

Jul 2017

Kazakhstan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2038

2038

1893

1894

1800

1800

Beginning Stocks

238

238

109

109

150

160

Production

2675

2675

3231

3241

2500

2600

MY Imports

0

0

10

10

10

10

TY Imports

0

0

10

10

10

10

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

2913

2913

3350

3360

2660

2770

MY Exports

804

804

1000

1000

600

600

TY Exports

776

776

1000

1000

600

600

Feed and Residual

1700

1700

1900

1900

1700

1700

FSI Consumption

300

300

300

300

300

300

Total Consumption

2000

2000

2200

2200

2000

2000

Ending Stocks

109

109

150

160

60

170

Total Distribution

2913

2913

3350

3360

2660

2770

Yield

1.3126

1.3126

1.7068

1.7112

1.3889

1.4444