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Home / Bioethanol / News Russian Federation Grain and Feed July Monthly UpdateProduction Russia's grain crop estimate has fallen to 78.0 mmt, including 44.3 mmt of wheat, 17.1 mmt of barley, and 4.8 mmt of corn. The decrease is due to a drought in some important grain producing regions, specifically in Volgograd and Orenburg oblasts, and in southern Rostov oblast. Drought has primarily affected spring grains. The situation in other regions of Russia has not been much different from last year, with total grain production output in European Russia is forecast slightly lower than last year. Expectations of average to better than average yields in Siberia and Urals are based on the assumption that fall weather in these regions will be normal, or better than normal. Unfavorable weather during the harvest period in these regions will result in the further decrease in the total grain yield. The Russian Ministry of Agriculture's grain production estimate for 2007 is 76.0 mmt. Experts' estimates of the grain harvest vary from 74.0 mmt to 79.0 mmt. The total area sown for spring grains is estimated at 31.0 million hectares (ha), 1.15 million hectares fewer than in 2006. The biggest decrease of spring grain area was in the Volga Valley Federal district — with an 820,000 ha reduction, including a 100,000 ha decrease in the Bashkortostan republic area, and 250,000 ha reductions in both Saratov oblast and Orenburg oblast. Harvested winter grain area will be higher than last year, the result of much better survival of winter grain crops. The total harvested area for 2007 grain is estimated to be between 43.4 million ha and 43.8 million ha. Winter grain yields are forecast to be the same as last year, but yields of spring grains will be lower than average in the major grain producing territories of European Russia. Consumption Lower than expected grain crop forecasts, along with increasing domestic and international grain prices, will create tension between domestic feed consumption and exports. Food domestic consumption is assumed stable, although increasing grain prices may stimulate Russian flour millers and bakers to lobby for reduced grain exports, and, given the election this year, the Russian government will be very sensitive to rising bread prices. In the meantime, grain market experts agree on the amount of grain for food use, leaving these figures unchanged between 18.0 and 19.5 mmt, while speculating primarily about feed use and exports. Estimates of «needs» in grain for feeding in 2007 vary from 25.0 mmt to 37.0 mmt. The last assumption is calculated based on the optimal norms of grain feeding per capita of existing herds of livestock and poultry. There has been noted improvement in the poultry industry, and an increase in industrial feeding at commercial farms. However there are still significant grain losses at feeding in the small households, which still account for a large portion of meat and milk producers. There is misuse of feed grain in the grain-abundant territories due to a lack of feed mills and poor logistics of grain transportation and handling. Considering these factors, the feed use domestic consumption is forecast at 34.0 mmt. Trade Given high international grain prices and forecasts of continued reduction of world carryover grain stocks, incentives for strong exports of Russian wheat and barley will continue through MY 2007/2008. Assuming that weather in Russia in the remaining months will enable a harvest of 78.0 mmt, or even 76.0 (the Russian Ministry of Agriculture's forecast), Russia may export 11.8 mmt of grain, including 10.1 mmt of wheat and 1.5 mmt of barley. Most Russian grain analysts agree that these export volumes are possible, but remark that the election year in Russia makes government policy, including possible tariff or quota regulation of grain exports, less predictable than ever. Policy Until now the government policy concerning the grain industry has remained unchanged, with only one exception. On June 5, 2007, the executive committee of the Federal Tariffs Service of the Russian Federation (FST) approved an exclusive tariff for grain shipments by rail in the Siberian and the Far Eastern federal districts. The tariff will be a 50% discount on the initial tariff and will apply to shipments traveling more than 1,100 km. The discount applies to grain that is being shipped to Far Eastern ports for export, but does not concern the transit of grain. This is a step toward decreasing transportation expenses reflected in the price of grain exports, but this measure will influence only the small portion of Russian grain that is produced in Siberia. The Russian Government has not supported the request of the Russian Grain Union on the shift of all grain cargoes from the second to the first category of railroads fees. At the end of June 2007, the Russian Government decided that Russia should accede to the Grain Trade Convention. This measure is a step toward better coordination of Russian grain export policy with rules of the international grain market. However, the results of this decision will not affect Russian policy this year. Non-tariff restrictions on grain exports, imports, and handling of grain in the domestic market are still in effect, such as request for grain quality certification at the VPSS and requests for fumigation of means of transportation at the VPSS's authorized bodies. According to experts and grain traders, the functional effectiveness of the grain market has been hampered by strengthening bureaucracy at all levels, which means rising numbers of certificates, permits, increase charges for non-requested services, etc. PSDs Wheat The wheat production forecast has fallen to 44.3 mmt. This year, exports of wheat will decrease by 500,000 tons to 10.1 mmt due to a smaller crop and strong demand from the domestic market. Feed domestic consumption will remain at 14.1 mmt, and end of year stocks will decrease to one of the lowest levels in the last 5 years. MY 2006/07 exports are estimated at 10.6 mmt, given that from July 2006 through May 2007, Russia already exported 10.06 mmt of wheat and an equivalent of 220,000 metric tons of grain in wheat flour. Monthly wheat exports increased between March and May, stimulated by high world prices, but experts say that domestic wheat resources for export were exhausted by the beginning of June. Barley The barley production forecast has been lowered to 17.1 mmt, with exports 100,000 tons lower than in MY 2006/07 due to high foreign demand for barley. Sustaining high levels of barley exports will decrease availability of barley for feeding, and feed domestic consumption will decrease to 11.6 mmt. End of year carry-over stocks will be low — less than 1.0 mmt. Corn Sown area for corn increased significantly in 2007, including in territories where corn for grain production is less reliable. Therefore, even with favorable weather, yields will be lower than in 2006. However, corn production is forecast at a record high of 4.8 mmt. Feed consumption is forecast at 3.7 mmt, while exports are forecast at 200,000 tons. USDA Foreign Agricultural Service
Date: 21.08.2007 Leave your comment
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