Black Sea: Russia talks big on wheat

RUSSIA may alomost double its wheat production in coming years.
Profarmer Canada reported Russia’s Agriculture Minister Alexander Tkachov last week saying his country could grow a whopping 117 million tonnes of wheat in the future.
That’s 36 million tonnes more than Russia’s predicted wheat production this year, which the US Department of Agriculture has tipped will be a record 81 million tonnes. If realised, this will be Russia’s fifth record wheat crop in as many years, and is about double that typically produced by the former communist country 15-20 years ago.
Mr Tkachov also said the high quality milling wheat made up 75 per cent of this year’s winter grain in Russia, up 7 per cent on last year.
Its comes as new data from Australian Export Grains Innovation Centre shows the amount of Russian wheat going into Australia’s top export destination, Indonesia, is rising.
AEGIC chief economist Ross Kingwell said for the first quarter of the 2017-18 marketing year Russian wheat exports to Indonesia had surged.
“Russian wheat exports to Indonesia exceeded 330,000 tonnes in the first quarter of 2017, up from just 991 tonnes for all of 2016, after a quarantine issue was resolved,” Professor Kingwell said. He said Russian wheat exports to various Asian countries had jumped after global freight rates fell, making it cheaper to ship grain from Europe to Asia, and the Russian currency dropped to very competitive levels.
“Russian wheat shipments to south, east and South East Asia surged 60 per cent in 2016-17 to 3 million tonnes.”
Prof Kingwell said the Black Sea countries would remain competitive in Indonesia, which could soon become the world’s biggest wheat importer.
“Having such a large purchaser of wheat on our doorstep is to our advantage however, just because their demand for wheat will grow does not necessarily mean that they will solely turn to Australia as their supplier,” he said.
“Like any consumer, they will seek value for money and so if larger volumes of affordable Black Sea grain become available then they will increasingly purchase that wheat.
“As Asian millers learn how best to use Black Sea wheat, which tends to be of lesser quality, they will then incorporate a higher percentage of this lower quality, cheaper wheat in some of their types of flour. “
Prof Kingwell said a good harvest in Russia, Ukraine and Kazakhstan had put downward pressure on international wheat prices which had been declining after a spike in June.
“For Australian farmers this means their wheat prices are now as low as they were at last harvest,” he said.
Australia exported more than three million tonnes of wheat to Indonesia from January to June this year, but Prof Kingwell said Australia was expected to export less in the coming year after forecasts of the lowest crop in eight years.

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