Grain and Feed Update

An Expert's View about Crops and Support Services in Kazakhstan

Posted on: 30 Jul 2012

As a result of very dry weather conditions in some key growing regions, Kazakhstan’s 2012 grain production is expected to drop sharply.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 7/25/2012 GAIN Report Number: Kazakhstan - Republic of Grain and Feed Update Kazakh Grain Production Prospects Worsen Approved By: Levin Flake Prepared By: Zhamal Zharmagambetova and Levin Flake Report Highlights: As a result of very dry weather conditions in some key growing regions, Kazakhstan’s 2012 grain production is expected to drop sharply to just over half of last year’s record level. However, despite sharply lower production, very large carry-in stocks will likely allow continued large export volumes in 2012/13. Post : Asta Production: na Kazakh grain production is expected to fall sharply in 2012 as a result of dry weather. For wheat, production is expected to fall to only 12 million metric tons compared to the record of nearly 23 million metric tons in 2011. Although grain area largely was steady from last year, wheat area fell for the 3rd year in a row. Area According to regional Kazakh agricultural departments, by the end of the planting campaign (June 12, 2012) 21.5 million hectares were sown to crops in Kazakhstan. This number accounts for 286,000 more than in 2011 and fallow land in Kazakhstan reached 3.2 million hectares, 140,000 less than in 2011. While grain area remained steady at 16.3 million hectares, there were some significant shifts between crops. Wheat area fell again in 2012 by 2 percent to 15.5 million hectares, while total barley area increased sharply by 140,000 hectares to 1.8 million hectares with the most dramatic increase in Kazakhstan’s northern regions. Oilseeds area increased only slightly, however again there has been a major shift in area between types of oilseeds. Sunflower area saw the largest decrease, with area down 15 percent (140,000 hectares) with the most significant decline in production occurring in the traditional production regions of East Kazakhstan and Pavlodar. According to the Kazakh Ministry of Agriculture, this precipitous drop can be best explained by a need for crop rotation and a desire to avoid monoculture in sunflower seed. It is reported that only the Kostanay region retained the same level of sunflower production as in 2011. Higher area to flax and rapeseed, however, is offsetting the smaller sunflower area. Flax area is up 19 percent to 388,000 hectares and rapseed area is up 47 percent to 230,000 hectares. The area of these crops are almost entirely in the northern wheat growing regions (Kostanay, North Kazakhstan, Akmola) and have also attributed to the lower wheat area. In Kostanay, rapeseed area has expanded from almost nothing a few years ago to 34,500 hectares in 2012. Area dedicated to grasses in these Northern regions has also increased significantly in 2012. Experts believe that the changes in Kazakhstan’s area planted composition are caused by three major factors. First, the huge wheat harvest in 2011 resulted in lower and unstable market prices, especially compared to oilseeds. Second, in larger agricultural enterprises, farmers are beginning to implement crop rotations and not plan monoculture wheat. Third, the government has had a strong support program for the livestock sector, which has caused an increase in demand for feedstuffs. As mentioned in the previous Grain and Feed Annual report, the Ministry of Agriculture is trying to encourage the diversification of crop area away from wheat in Kazakhstan, especially as in most places wheat is planted monoculture. The long term strategy of the government is by 2020 to have wheat comprise just 52% of total area sown to all crops, down from the current level of 65% percent (and as high as 80% in some northern provinces). The reason for encouraging this decline in area is to improve agronomic practices of crop rotation, and provide more feed grains and oilseeds to the expanding livestock and poultry industries. Planted Area According to Regional Agricultural Departments (as of June 12th in 1,000 hectares): Regions All Including crops Grains Including total Wheat Barle Oat Mill Buckwhe Cor Ric Pulse Othe y et at n e s r grain s AKMOLA 4900.4 4291.3 3916.4 321.6 26.3 1.9 1.5 22.0 1.6 AKTOBE 729.0 578.8 455.3 110.5 1.9 5.9 2.1 3.1 ALMATY 927.5 467.6 204.7 163.2 2.5 0.2 1.0 67.6 14. 2.0 12.3 2 EAST-KAZ 1209.4 540.2 358.2 98.0 20.5 3.8 29.9 0.2 6.7 22.9 ZHAMBYL 536.6 242.8 120.2 112.3 0.1 10.2 0.1 WEST-KAZ 586.4 400.7 277.6 102.0 0.7 4.8 0.4 0.2 15.0 KARAGAN 982.6 675.6 559.4 101.1 5.3 0.2 0.2 9.4 DA KYZYLORD 158.9 83.9 6.1 1.0 0.8 0.7 75. A 3 KOSTANAI 5129.7 4339.0 3987.6 224.7 47.0 14.0 8.1 57.6 PAVLODAR 1063.6 550.6 399.2 68.4 25.7 12.8 33.1 3.1 8.3 NORTH- 4509.2 3835.0 3111.3 470.8 50.3 0.7 3.5 36.8 161. KAZ 6 SOUTH- 752.7 195.2 132.8 32.0 0.6 24.1 3.2 2.5 KAZ TOTAL 21485. 16200. 13528. 1805. 180. 45.8 77.7 102. 92. 142. 224. 9 6 8 5 2 7 6 5 8 Was in 2011 21199. 16199. 13822. 99.6 93. 7 1 7 5 +/- to 2011 286.2 1.5 -293.9 3.1 -0.9 Regions Cott Sug Tobac Pota Oilsee Including on ar co to ds Sunflo Soybea Safflo Rapese Fla Oth beat wer ns wer eds x er s AKMOLA 190.5 50.5 30.5 79. 30.3 18.4 2 AKTOBE 40.9 40.9 8.3 ALMATY 138.8 34.7 75.4 26.7 2.0 13.7 0.7 36.3 EAST-KAZ 381.3 363.9 4.7 5.1 7.6 24.4 ZHAMBYL 82.4 3.0 1.4 78.0 5.3 7.3 WEST- 63.6 38.1 6.3 0.1 1.1 18.0 4.0 KAZ KARAGAN 17.0 0.5 7.5 8.6 0.4 12.8 DA KYZYLOR 2.0 0.2 1.8 8.4 DA KOSTANA 221.6 45.5 14.2 34.5 120 6.7 10.9 I .8 PAVLODA 207.0 203.8 1.7 1.5 15.0 R NORTH- 371.0 29.4 0.02 154.3 177 10.3 27.5 KAZ .0 SOUTH- 117.7 5.0 0.003 112.4 0.3 147. 0.2 0.5 12.8 KAZ 3 TOTAL 1833. 815.0 82.0 251.9 230.7 388 66.0 147. 19.2 1.2 186. 8 .2 3 1 Was in 1817. 955.9 70.7 251.8 156.7 326 56.1 160. 21.0 1.2 184. 2011 3 .1 6 2 +/- to 2011 16.5 -140.9 11.3 0.1 74.0 62. 9.9 -13.3 -1.8 0 1.9 1 Yield Very dry weather, especially in the western part of Kazakhstan is expected to strongly impact yields in 2012. Kostanai, Karaganda, West-Kazakhstan and Aktobe regions are the most affected by this dryness and heat. The Governor of Kostanay in late July reported that nearly a quarter of the crops in that region are in bad condition (around 1 million hectares). He also mentioned that the situation continues to worsen as rain continues to be absent. He recommended that the Minister of Agriculture even announce an emergency situation. The situation, however, in the other key grain growing areas of Akmola and North Kazakhstan are not as negative. The Kazakh Ministry of Agriculture has released a forecast of production of 14 million tons of grain (compared to nearly 27 million tons last year) and an average yield of 0.87 tons per hectare, as well as the following regional estimates: Northern region (Akmola, Kostanai, Pavlodar, North-Kazakhstan oblasts): 11.4 million tons with an average yield 0.87 tons per hectare; Eastern, central and western regions (Aktobe, West-Kazakhstan, Karaganda, East-Kazakhstan oblasts): 1.4 million tons with an average yield of 0.63 tons per hectare; and Southern region: 1.2 million tons with an average yield of 1.32 tons per hectare. Ministry officials state that while this year’s harvest is expected to be much worse than last year it is still expected to be higher than in 2010 (when grain production was 12 million tons and wheat production was less than 10 million). Only six percent of crops currently are considered to be in bad condition (a similar estimate to last year). As of mid-July, the Ministry assessed the quality of plants to be the following: 5.846 million hectares of grain (or 36.5 percent) is in good condition; 8.597 million hectares (or 53.7 percent) is in satisfactory condition; and 1.503 million hectares (or 9.4 percent) is in bad condition. Only 0.4 percent of the crop is estimated to have already been lost. However, conditions in many Western regions have deteriorated since these figures were released. Due to the drought conditions in parts of Kazakhstan, the Executive Secretary of the Kazakh Ministry of Agriculture stated that the Government is preparing a number of measures to support effected regions. Such measures include creating seeds stock reserve, possible loans extension, and separate special support to make feedstuffs less expensive. Harvesting Although the bulk of the grain crop will not be harvested for a couple of months, as of July 13, 2012, harvesting began of winter grain in western and southern parts of Kazakhstan, where the first 122,400 thousand hectares of grain were harvested with a yield of 0.98 tons per hectare (including in Almaty region at 1.56 tons/hectare, Western Kazakhstan at 0.11 tons/hectare, Zhambyl at 0.61 tons/hectare, Kyzylorda at 0.36 tons/hectare, and Southern Kazakhstan at 0.86 tons/hectare). Trade: Despite lower (and below-average) grain production in 2012, very large carryin stocks are expected to allow for a continuation of large scale wheat and flour exports in 2012/13. In fact, trade year (July/June) and marketing year (Sept/Aug) wheat exports are forecast at 7.5 million tons, which is near the 5-year average. In addition to large stocks, smaller export volumes and less competition from Russia due to a worse crop there should also create strong demand for Kazakh grain. According to the Statistics Agency and the National Railways, between July 1, 2011 and June 30, 2012, Kazakhstan exported 12.1 million tons of grain and flour in grain equivalent, which was 2.2 times greater than in 2010/11 (8.4 million tons more of grain and 2.6 million more of flour). Officials believe one factor behind this export growth was Kazakhstan’s transport subsidies which subsidies a significant amount of exports to Russian and Baltic Ports as well as to China. However, the Ministry reported recently that due to higher global grain prices and strong demand for Kazakh wheat, they are considering ending transport subsides as of August 1, 2012. Kazakh wheat and flour exports primarily have been shipped to other Former Soviet Union countries Wheat/Flour Exports Surge (TMT) 1400 2011/12 1200 1000 800 600 such as Azerbaijan and other Central Asian countries, although shipments to markets such as Turkey and Egypt have 40 also climbed. Approximately 160,000 tons of grain was shipped to China in 2011/12 compared to just 31,000 the year before. 5-yr avg 200 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun (Est.) (Est.) Stocks: Due to the bumper crop of 2011, Kazakhstan still has very large stocks of grain. According to the State Statistical Service, Kazakh grain stocks as of July 1, 2012 reached 9.8 million tons, 9.4 million of which was wheat, nearly triple last year’s level. Although still relatively small, oilseeds stocks were also up significantly from last year at 133,000 metric tons, with sunflower and flax being the largest component, followed by rapeseeds and soybeans. The Ministry of Agriculture estimates that the elevators of the main grain producing regions in Kazakhstan are full at 34 to 63 percent capacity. Between September 2011 and June 2012, 3.4 million tons of grain was moved from Kazakstan’s northern regions to other areas in order to free up grain storage for the new harvest, and this movement program is continuing. Very Large Stocks of Grain/Wheat (As of July 1, Million Metric Tons) 10 9 8 7 The Kazakh Government stated that there are 221 licensed grain storage facilities with a total capacity of 13.9 million tons. Additionally, they estim6ate that there is on-farm storage of 9 million tons. Despite this large capacity, a significant portion of grain storage facilities were constructed 50 years ago or more. In order to help renovate these facilities, the Government Commission on Modernization has now decided to update 1.5 million tons of stora5ge by extending on to existing facilities and building new ones. According Grain to this mandate, the Food Contracting Corporation will extend the capacity of six storage facilities in southern and northern Kazakhstan, as well as in the Akmola, Mangistau and Aktobe regions. A remaining 800,000 tons of storage will be funded by private companies through Ka 4zAgroFinance. Wheat 3 2 1 0 2009 2010 2011 2012 Prices: Kazakhstan wheat prices were largely stable from April thru the end of June at between $170-$175 per ton (3rd Class wheat, 23-24% gluten at Russian border). However, in July prices started increasing as a result of the dryness and hot weather impacting the crops and by the end of July the price had risen by $10 per ton to $185. Wheat Kazakhstan 2010/2011 2011/2012 2012/2013 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 Market Year Begin: Jul 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 14,262 14,262 13,849 13,849 13,500 13,500 Beginning Stocks 4,300 4,300 2,883 2,883 5,625 6,625 Production 9,638 9,638 22,732 22,732 13,000 12,000 MY Imports 7 7 10 10 10 10 TY Imports 7 7 25 25 10 10 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 13,945 13,945 25,625 25,625 18,635 18,635 MY Exports 4,862 4,862 11,000 11,000 7,000 7,500 TY Exports 5,519 5,519 10,500 10,500 7,000 7,500 Feed and Residual 1,900 1,900 4,000 3,000 2,500 2,500 FSI Consumption 4,300 4,300 5,000 5,000 5,000 5,000 Total Consumption 6,200 6,200 9,000 8,000 7,500 7,500 Ending Stocks 2,883 2,883 5,625 6,625 4,135 3,635 Total Distribution 13,945 13,945 25,625 25,625 18,635 18,635 1000 HA, 1000 MT, MT/HA
Posted: 30 July 2012

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