Russia anticipates record wheat harvest

08.09.2016

Russia’s wheat crop is forecast to be its largest at 72 million tonnes due to favorable weather, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in a Aug. 31 report.

As of Aug. 30, 62.03 million tonnes of wheat has been harvested, up 32% from the same period of last year.

Total grain exports for Russia for market year 2016-17 is forecast at 37 million tonnes. The total grain exports increase is largely due to an increase in the forecast for wheat exports from 24.5 million tonnes to 28 million tonnes, the FAS said.  On Aug. 1, Russian traders and Russia’s Ministry of Agriculture appealed to the Russian government with a request to lift the export duty on wheat. On Sept. 2, Russian Prime Minister Dmitry Medvedev said the government would indeed waive the export duty on wheat for two years, noting such a move should provide an additional incentive for growth in the Russian domestic grain market.

The Russian ruble devaluation in 2014-15 and 2015-16 helped make Russian grain very competitive in world markets, without disrupting domestic grain prices, the FAS said. However, the ruble stabilized in the beginning of market year 2016-17. While volatility is still possible, it is unlikely to be similar to its devaluation during the last two years, according to the report.

Assuming that wheat exports will not absorb the entire excessive wheat crop, the FAS increased its forecast of feed and residual consumption of wheat and end-of-year grain stocks to 16 million tonnes and 11.1 million tonnes, respectively. An abundance of feed quality wheat may influence rations and composition of feeds for poultry and livestock in market year 2016-17, the report said.

There is no aggregate information on the quality of Russian wheat in 2016, the FAS said. 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 has high protein content, are not much bigger than last year, if not the same. Meanwhile, volumes of feed quality wheat are much greater than last year, the report noted. Farmers are likely to try to sell the feed quality wheat first, and wait for better prices for milling wheat, according to the report. Thus, market prices of wheat in European Russia, the major wheat exporting region, move in different directions. The price of milling wheat Class 3 has started increasing; the price of milling wheat Class 4 has stopped declining and has stabilized at a relatively low level compared with the last season; and the price of feed quality wheat continues to fall.




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