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Home / Bioethanol / News Russian Federation Grain and Feed September Monthly Update 2008
Prepared by: Executive Summary FAS Moscow raises its total grain production forecast for MY 2008 to 93.2 million metric tons (MMT), an increase of 4.6 MMT from August estimates. The increase is due to good weather conditions in July and August, reported harvest progress, and excellent yields of winter grains - especially winter wheat - in European Russia. The wheat production forecast is 56.2 MMT (a 2.7 MMT increase over the August forecast), the barley production forecast is 18.2 MMT (a 700,000 MT increase), and the rye production forecast is 4.2 MMT (a 300,000 MT increase). The corn production forecast is 5.6 MMT (a 100,000 MT increase), and oat production is expected to reach 5.2 MMT (a 300,000 MT increase). Forecasts for millet and rice will remain unchanged: 500,000 MT and 770,000 MT (rough weight) respectively. Other grains and legumes will add 2.5 MMT to Russia's grain crop. Russia's grain exports are currently forecast at 14.9 MMT, including 13.0 MMT of wheat and 1.6 MMT of barley. Given the high wheat crop, there will be enough milling quality wheat to satisfy domestic demand, but the share of milling wheat is lower than in 2007. Prices of feed quality wheat and barley continue to decrease rapidly, while the decrease of milling wheat prices slowed down. The Russian government announced the beginning of grain procurement interventions, and it added feed wheat and barley to the list of procured products. However, actual purchase of these crops has not yet begun, and producers are primarily interested in support of feed grains prices. 2008 Grain Crop Production Forecasts FAS Moscow raises its total grain production forecast for MY 2008 to 93.2 million metric tons (MMT), an increase of 4.6 MMT from August estimates. The increase is due to good weather conditions in July and August, reported harvest progress, and excellent yields of winter grains - especially winter wheat - in European Russia. The wheat production forecast is 56.2 MMT (a 2.7 MMT increase over the August forecast), the barley production forecast is 18.2 MMT (a 700,000 MT increase), and the rye production forecast is 4.2 MMT (a 300,000 MT increase). The corn production forecast is 5.6 MMT (a 100,000 MT increase), and oat production is expected to reach 5.2 MMT (a 300,000 MT increase). On August 25, 2008, Russian Minister of Agriculture Aleksey Gordeyev increased the official grain crop forecast from 85.0 MMT to "not less than 95.0 MMT," if weather conditions stay favorable in September. The forecast is based on crops harvested by August 25, 2008. Grain analysts' forecasts vary from 93 MMT to 100 MMT. Most analysts report that the grain crop will break a 15-year record primarily because of high winter wheat and winter barley production, whereas spring grains will not significantly exceed the 2007 level. 2008 Harvest Progress According to Russia's Ministry of Agriculture, Russian farmers harvested 25.7 million hectares (55.5% of area sown with grain) by August 25, 2008. Production on this area was 75.3 MMT, 22.0 MMT more than on the same date last year. The average grain yield was 2.93 MT/HA, 0.55 MT/HA more than last year. 43.2 MMT of wheat were harvested from 13.0 million hectares (48.4 of the planned harvest area), and the reported average yield was 3.35 MT/HA (0.66 MT/HA more than on the same date last year). Barley was harvested from 6.0 million hectares (61.6% of sown area). Production on this area was 17.0 MMT (5.2 MT more than last year), and the average yield was 2.84 MT/HA (0.72 MT/HA more than in 2007). In the Southern Federal District farmers harvested 85% of grain area, and production reached 32.1 MMT, a 10.7 MMT increase over 2007. The grain yield averages 3.68 MT/HA, a 0.8 MT/HA increase from 2007. In the Volga Valley Federal District farmers harvested 18.1 MMT of grain from 8.4 million hectares (61.4% of sown area) by August 25, 2008. The reported yields are 2.15 MT/HA, 0.2 MT/HA higher than in 2007. In the Central Federal District farmers harvested 82.2% of grain area and produced 21.6 MMT on these 6.3 million hectares. The reported yield is 3.44 MT/HA, 0.99 MT/HA more than in 2007. In the Ural Federal District farmers harvested 1.2 MMT of grain by August 25, 2008. Production was 0.5 MMT higher than on the same date last year, but average yields declined 0.26 MT/HA to 1.58 MT/HA. In the Siberian Federal District unfavorable weather caused harvesting delays, and drought in some provinces of this District resulted in low yields. By August 25, 2008, farmers harvested 1.2 million hectares (11.3% of sown area), and the reported yield was 1.41 MT/HA, a 0.36 MT/HA decrease from the same date last year. Reported production was 1.6 MMT. Farmers of the Far Eastern Federal District usually produce less than 0.8 MMT of grain, and as in Siberia, production in 2008 may also decrease on a year-on-year basis. By August 25, 2008 they harvested 69% of grain area (291,000 hectares) and produced 380,000 MT (24,000 MT less than on the same date in 2007). The average yield is 1.33 MT/HA (0.5 MT/HA lower than in 2007). Grain Quality According to traders and grain inspectors, milling wheat's share of the bumper wheat crop will be smaller in 2008 than in 2007, although quantity of the top grade milling wheat will be enough to cover domestic demand for the crop. Deterioration of quality (based on the quantity and quality of gluten in the wheat) is connected with the weather, the late spring application of ammonium fertilizer in some southern territories in European Russia, and the spread of the sunny bug pest in the wheat fields. Grains damaged by sunny bug may decrease the quality of the whole load of wheat from Class 4 to feed quality while stored at the elevators, and wheat unloaded from the elevators may be of lower quality than incoming wheat. Prices of feed quality wheat continue to decrease rapidly along with harvest progress in European Russia, while prices of top grade (Class 3) milling wheat stabilized. This is another indicator that wheat is generally of a lower quality this year than in 2007. Trade Post forecasts that grain export in MY 2008 will reach 14.9 MMT, including 13.0 MMT of wheat and flour (in grain equivalent), and 1.6 MMT of barley. According to experts, further increases in grain exports in MY 2008 will be restricted by the limited availability of milling quality wheat, tough competition in the traditional wheat and barley markets with Ukrainian wheat, and limited capacity of Russia's transportation and storage systems in European Russia to export grain. The Russian Ministry of Agriculture forecasts that in MY 2008, Russia will export 15.0 MMT of grain. Analysts' export forecasts vary from 14 to 18 MMT, but all experts expect competition on the world grain market this year to be much stronger than in 2007. The Russian Ministry of Agriculture began closely monitoring Russia's grain exports. According to its data, in MY 2008 Russia exported 2.01 MMT of grain by August 18, 2008, including 1,738,000 MT of wheat and 270,000 MT of barley. In July exports were 887,000 MT (722,000 MT of wheat and 165,000 MT of barley). From August 1 to August 18, Russia exported 1.12 MMT of grain (1,016,000 MT of wheat and 105,000 MT of barley). Marketing Grain Futures Trading In August 2008, Russia continued to trade grain futures. In July 2008, the exchange started trading January 2009 wheat futures, both EXW and FOB. The settle prices of January 2009 futures are now lower than November futures. The table below shows the results of the futures trade as of August 28, 2008. Trade in grain futures became more active in August, but it still remained low and did not significantly influence the actual prices at which farmers sold grain to traders.
Price* Turnover
Grain prices in Russia continue to decrease. Analysts report that prices are falling rapidly in European Russia, as the harvest is in full swing and the forecast is strong. However, price trends for milling and feed quality grain are different. Analysts at WJ ProZerno report that prices of milling quality wheat (Classes 3 and 4) began to fall less quickly, and in mid-August these prices began to increase because there is a low supply of wheat with good gluten. Contrastingly, the supply of feed quality wheat and barley is huge, and their prices are falling very quickly.
Jun 20 Jun 27 Jul 4 Jul 11 Jul 18 Jul25 Aug 8 Aug 15 Aug 22 Policy Grain Procurement Interventions Begin Grain Procurement Interventions started on August 19, 2008. Four sessions were planned for August 19, 20, 26, and 27. The Agency for Regulation of the Food Market (http://www.oaoapr.ru/) will conduct the interventions at the Moscow International Commodity Exchange (http://www.micex.ru/commodity/). Updated information on the grain procurement interventions is also published on the website of the agricultural newspaper Krestyanskiye Vedomodti (http://www.agronews.ru/InterZE). Grain purchase is very slow. For milling wheat, farmers are waiting for an increase in the market price to sell their wheat commercially. Farmers are also waiting for the government to start purchasing feed wheat and barley. As of August 27, the government had purchased only 1,485 MT of Class 4 milling wheat and 4,725 MT of Group A food-quality rye with the intervention fund. The government paid 4,900 rubles/MT for wheat and 3,900 rubles/MT for rye. According to the latest information, the Ministry of Agriculture may purchase up to 2.0 MMT of feed quality grain. If domestic livestock and poultry industries increase their demand for feed grain, however, the government may purchase less than this target amount. The Ministry of Agriculture has permission to spend between 24 and 25 billion rubles on grain intervention from the 31 billion rubles it added to Rosselkhozbank's capital. The Ministry of Agriculture has discretionary authority to update the government's intervention policy and decide what grain to purchase with the 24-25 billion ruble fund. Government Grain Trade
The media report that the Ministry of Agriculture does not currently intend to interfere in the foreign grain trade or limit grain exports. The Government Grain Trading Company has not yet been created. Nevertheless, the Ministry of Agriculture may develop different export strategies for milling quality wheat and feed wheat. To this end, the Ministry of Agriculture may propose that the government develop different Customs codes (HS Numbers) for milling and feed quality wheat in MY 2008/09.
Date: 12.09.2008 Comments:Leave your comment
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LcgDGGCCMfjiu
I am forever indebted to you for this inforamtion.
I am forever indebted to you for this inforamtion., 29.08.2011 02:50:39
hi
i want ask about the price of russian Barley by ton . thank you
alrafaa, 04.10.2009 06:37:06