Russian Grain Exports Continue to Surge

An Expert's View about Agriculture and Animal Husbandry in Russia

Posted on: 27 Nov 2011

As a result of higher grain production, weaker export competition, and strong foreign demand, Russia’s grain exports have soared during the first 3 months of the 2011/12 marketing year, and are estimated at nearly 10 million tons during this period.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 11/2/2011 GAIN Report Number: RS1148 Russian Federation Post: Moscow Russian Grain Exports Continue to Surge Report Categories: Grain and Feed Approved By: Levin Flake Prepared By: Yelena Vassilieva Report Highlights: As a result of higher grain production, weaker export competition, and strong foreign demand, Russia?s grain exports have soared during the first 3 months of the 2011/12 marketing year, and are estimated at nearly 10 million tons during this period. Overall grain exports are forecasted at 21.7 MMT, including 19.0 MMT of wheat, 1.8 MMT of barley, and 0.6 MMT of corn. Some Russian officials have threatened to impose export tariffs if exports exceed 23-24 MMT (which would be a record) in MY 2011. Winter sowing for 2012 production is continuing, and the Ministry of Agriculture estimates winter sown area (primarily grain) will be up more than 10 percent from last year. Production: FAS Moscow forecasts total grain crop at 90.2 MMT, including 56.0 MMT of wheat, 16.6 MMT of barley, 6 MMT of corn, and 11.6 MMT of other grains and legumes. According to Russian top officials, grain production in 2011 may reach 90-92 MMT. The final data will be published only in the beginning of CY 2012. The recent Agricultural Ministry?s (MinAg) harvest report shows that Russian grain crop may exceed 90 MMT this year. Harvest Progress According to the MinAg, as of October 25, 2011 Russia harvested 95 MMT from 41.1 million hectares that is 96 percent of grain sown area (Note: Harvest progress data is in bunker weight, which is usually 5-8 percent higher than the clean weight that is reported as final crop in Russia). By crops the harvest progress is the following: 58.9 MMT of wheat was harvested from 24.7 million hectares (98 percent of sown area). The average wheat yield is 2.38 metric tons (MT) per hectare, higher than in 2010 (1.98 MT/ha), but lower than in 2009 (2.41 MT/ha); 17.6 MMT of barley was harvested from 7.7 million hectares (99 percent of sown area). The average yield is 2.29 MT/ha, higher than in 2010 (1.79 MT/ha), but lower than in 2009 ? 2.44 MT/ha); 3.5 MMT of corn were harvested from 0.8 million hectares (49 percent of sown area). The average yield is 4.37 MT/ha, or higher than in 2010 (2.28 MT/ha) and in 2009 (3.5 MT/ha). The corn crop harvest is in the full swing in the South of European Russia; Rice crop this year may be lower than in 2010. As of October 25, 2011 Russia harvested 836,000 MT from 155,000 hectares (85 percent of sown area), with the average yield of 5.4 MT/ha. On the same date in 2010 Russia harvested 1.1 MMT of rice with the average yield of 5.75 MT/ha; In 2011 Russia will more than double production of buckwheat, one of Russia?s major food crops. Buckwheat retail prices tripled in MY 2010, and Russian farmers increased area sown to buckwheat in 2011, and favorable weather increased yields from 0.67 MT/ha in 2010 to 0.97 MT/ha in 2011. As of October 25, 2011 farmers harvested 738,000 MT of buckwheat from 759,000 hectares (90 percent of sown area). Winter Sowing As of October 25, 2011, Russian farmers planted 14.9 million hectares to winter crops, mostly grains, and due to favorable weather and good moisture, winter planting will continue through the first week of November. The Minister of Agriculture Yelena Skrynnik reported that Russian farmers will plant at least 17 million hectares with winter crops; or 2 million hectares more than in the fall of 2010. Yields of winter crops could benefit as a result of increased application of mineral fertilizer. According to the Ministry of Agriculture, as of October 2011 farmers? stocks of mineral fertilizer were 2.32 MMT (active substance), 0.13 MMT more than in the fall 2010. However, farmers continue to complain about permanently increasing inputs prices, especially fuel and lubricants. They report that unless the government administratively curbs fuel prices, as it did in the spring 2010 and 2011, the spring field work may be under threat. Trade: Given the good grain crop, and the speed of grain exports in July-September, 2011, FAS/Moscow grain exports forecast has been increased to 21.7 MMT, including 19.0 MMT of wheat, 1.8 MMT of barley, 0.6 MMT of corn, and almost 0.3 MMT of other grains and legumes and their products. Grain Exports in July - September 2011 The grain export ban discontinued on July 1, 2011, and since then and through September 2011, Russia exported over 9.7 MMT of grain and grain products. In July 2011 Russia exported 2.6 MMT (mostly wheat from carry-over stocks), and August grain exports exceeded 3.3 MMT, and in September reached a record of 3.8 MMT. Wheat exports in July ? September totaled 8.5 MMT. Russia exported wheat to 30 countries, and the top ten recipients were Egypt (2,359,810 MT), Turkey (1,176,190 MT), Italy (432,470 MT), Kenya (404,420 MT), Yemen (335,380 MT), Spain (324,740 MT), Israel (323,080 MT), Azerbaijan (248,710 MT), Georgia (217,900 MT), and Djibouti (206,200 MT). Russia?s exports of wheat flour in these three months were 120,000 MT, or grain equivalent of 170,000 MT. Barley exports in July ? September reached 1.0 MMT. Barley was exported to over 10 countries, and almost 67 percent (662,040 MT) of Russia?s barley were shipped to Saudi Arabia. Other major recipients of Russian barley were Israel (74,810 MT), Sudan (48,430 MT), and Iran (41,830 MT). In July ? September 2011 Russia also exported 50,000 MT of corn, 23,000 MT of rye, and 7,900 MT of rice. Chart 1. Russia?s Grain Exports in MY 2010, and in July ? September 2011 Grain exports in October ? December 2011 Industry analysts forecast that grain exports in October ? December 2011 will be lower than in July ? September 2011 due to several factors: Export competitor prices have become more competitive against Russian grain; In September 2011, the US dollar was strengthening to ruble, stimulating Russian exports, and reached its peak of approximately 32.6 rubles per $1 by the end of September. In October, however, the exchange rate stabilized around 32 rubles and began decreasing in the end of October; According to industry analysts, stocks of wheat at the farms of the Southern European Russia (closest to ports provinces) have decreased, and incentives to export grain weakened. Farmers in Siberia have good grain crop and high carry-over grain stocks, but the cost of shipping their grain to the ports is very high, and limits their ability to sell grain for exports. Grain traders have already accumulated enough grain to continue exports in November, and, according to SovEcon, shipped up to 3.4 MMT of grain in October, but the total grain exports in the 4th quarter of 2011 will not repeat July-September success; In the end of November, Russia will enter a season of weather problems in most of Russia?s ports (ice in Volga-Don, storms in the Black sea) and this negative-for-exports period, including long Christmas holidays, may last through February 2012. (Please see Chart 2 below for average seasonality of Russian wheat exports). Chart 2. Seasonality of Russia?s Grain Exports (2002-2011 Monthly Average) Note: - In February 2008 Russia introduced temporary grain export duties until July 2008; - in August 2010 Russia imposed an export ban that was in force until July 1, 2011 Policy: The Russian government has stated that it is comfortable with this year?s grain production, and the present pre-election campaign has diverted its attention from farmers? policy. Thus, the government decisions on legislation in the agricultural sphere have been moved to the end of CY 2011. This legislation will involve the development of new rules for grain interventions, the use of warehouse receipts, grain quality control, and grain export control. In the end of September, the First deputy Prime Minister Viktor Zubkov reported that if Russian grain exports in MY 2011 exceed 23-24 MMT (which would be a record), then the government will impose some export restrictions. The Ministry of Economic Development, which is responsible for development of economic and trade policy, has theoretically supported this idea, but has not developed any draft legislature for implementation of these measures. Marketing: Prices Due to the increase of the dollar exchange rate to Russian ruble from 28.87 rubles in the end of August, 2011 to 32.59 rubles in the end of September, wheat prices in rubles were decreasing slower than in US dollars. The gap between elevator gate prices in the European Russia, where there is close access to export ports, and prices in Siberia, remains very large. Chart 3. Grain Prices, European Russia, EXW, July 1 ? October 21, 2011, US Dollars Sourc e: ProZerno Chart 4. Grain Prices, European Russia, July 1 ? October 21, 2011, EXW, Rubles Source: ProZerno Chart 5. Russia: Price of Wheat of Milling Quality, Class 4, by Regions, Rubles Source: ProZerno Production, Supply and Demand Data Statistics : PSD, Wheat, 1,000 Metric Tons, Area in 1,000 Hectares Wheat Russia 2009/2010 2010/2011 2011/2012 Market Year Begin: Jul 2009 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 28,698 28,700 26,614 21,710 25,679 26,000 Beginning Stocks 10,743 10,479 14,521 14,257 13,535 13,315 Production 61,770 61,770 41,508 41,508 56,000 56,000 MY Imports 164 164 89 100 200 100 TY Imports 164 164 89 100 200 100 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 72,677 72,413 56,118 55,865 69,735 69,415 MY Exports 18,556 18,556 3,983 3,950 18,000 19,000 TY Exports 18,556 18,556 3,983 3,950 18,000 19,000 Feed and Residual 16,800 16,800 16,000 16,000 16,000 15,500 FSI Consumption 22,800 22,800 22,600 22,600 22,600 22,600 Total Consumption 39,600 39,600 38,600 38,600 38,600 38,100 Ending Stocks 14,521 14,257 13,535 13,315 13,135 12,315 Total Distribution 72,677 72,413 56,118 55,865 69,735 69,415 1000 HA, 1000 MT, MT/HA PSD, Barley, 1,000 Metric Tons, Area in 1,000 Hectares Barley Russia 2009/2010 2010/2011 2011/2012 Market Year Begin: Jul 2009 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 9,094 7,750 7,214 4,960 7,960 8,000 Beginning Stocks 3,813 3,637 2,395 2,238 1,386 1,188 Production 17,881 17,900 8,350 8,350 16,500 16,600 MY Imports 8 8 408 400 200 200 TY Imports 13 8 400 400 200 200 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 21,702 21,545 11,153 10,988 18,086 17,988 MY Exports 2,657 2,657 267 300 1,600 1,800 TY Exports 2,086 2,086 800 1,000 1,600 1,500 Feed and Residual 12,150 12,150 5,500 5,500 9,800 9,800 FSI Consumption 4,500 4,500 4,000 4,000 4,500 4,500 Total Consumption 16,650 16,650 9,500 9,500 14,300 14,300 Ending Stocks 2,395 2,238 1,386 1,188 2,186 1,888 Total Distribution 21,702 21,545 11,153 10,988 18,086 17,988 1000 HA, 1000 MT, MT/HA PSD, Corn, 1,000 Metric Tons, Area in 1,000 Hectares Corn Russia 2009/2010 2010/2011 2011/2012 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 1,365 1,100 1,416 1,020 1,743 1,600 Beginning Stocks 254 287 122 160 162 130 Production 3,963 3,950 3,075 3,075 6,000 6,000 MY Imports 32 50 200 150 50 50 TY Imports 32 50 200 150 50 50 TY Imp. from U.S. 0 0 0 0 0 40 Total Supply 4,249 4,287 3,397 3,385 6,212 6,180 MY Exports 427 427 35 55 600 600 TY Exports 427 427 35 55 600 600 Feed and Residual 3,200 3,200 2,800 2,800 4,500 4,500 FSI Consumption 500 500 400 400 500 500 Total Consumption 3,700 3,700 3,200 3,200 5,000 5,000 Ending Stocks 122 160 162 130 612 580 Total Distribution 4,249 4,287 3,397 3,385 6,212 6,180 1000 HA, 1000 MT, MT/HA PSD, Rye, 1,000 Metric Tons, Area in 1,000 Hectares Rye Russia 2009/2010 2010/2011 2011/2012 Market Year Begin: Jul 2009 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 2,147 2,150 1,757 1,380 1,623 1,800 Beginning Stocks 312 297 308 360 225 310 Production 4,333 4,300 1,642 1,650 3,000 3,200 MY Imports 0 0 150 150 0 0 TY Imports 0 0 150 150 0 0 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 4,645 4,597 2,100 2,160 3,225 3,510 MY Exports 12 12 0 0 10 30 TY Exports 11 11 10 0 10 30 Feed and Residual 825 825 75 100 100 250 FSI Consumption 3,500 3,400 1,800 1,750 2,900 2,980 Total Consumption 4,325 4,225 1,875 1,850 3,000 3,230 Ending Stocks 308 360 225 310 215 250 Total Distribution 4,645 4,597 2,100 2,160 3,225 3,510 1000 HA, 1000 MT, MT/HA PSD, Oats, 1,000 Metric Tons, Area in 1,000 Hectares Oats Russia 2009/2010 2010/2011 2011/2012 Market Year Begin: Jul 2009 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 3,374 3,000 2,895 2,250 3,233 3,300 Beginning Stocks 499 581 397 478 160 298 Production 5,401 5,400 3,218 3,220 5,000 4,600 MY Imports 0 0 0 0 0 0 TY Imports 0 0 0 0 0 0 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 5,900 5,981 3,615 3,698 5,160 4,898 MY Exports 3 3 5 0 5 0 TY Exports 4 4 5 0 5 0 Feed and Residual 4,000 4,000 2,050 2,000 3,400 3,200 FSI Consumption 1,500 1,500 1,400 1,400 1,500 1,400 Total Consumption 5,500 5,500 3,450 3,400 4,900 4,600 Ending Stocks 397 478 160 298 255 298 Total Distribution 5,900 5,981 3,615 3,698 5,160 4,898 1000 HA, 1000 MT, MT/HA PSD, Millet, 1,000 Metric Tons, Area in 1,000 Hectares Millet Russia 2009/2010 2010/2011 2011/2012 Market Year Begin: Jul 2009 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 522 250 521 170 842 250 Beginning Stocks 0 0 0 0 0 0 Production 265 265 131 130 700 400 MY Imports 0 0 0 0 0 0 TY Imports 0 0 0 0 0 0 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 265 265 131 130 700 400 MY Exports 0 0 0 0 0 10 TY Exports 0 0 0 0 0 10 Feed and Residual 90 90 5 5 400 245 FSI Consumption 175 175 126 125 300 145 Total Consumption 265 265 131 130 700 390 Ending Stocks 0 0 0 0 0 0 Total Distribution 265 265 131 130 700 400 1000 HA, 1000 MT, MT/HA PSD, Rice, Milled, 1,000 Metric Tons, Area in 1,000 Hectares Rice, Milled Russia 2009/2010 2010/2011 2011/2012 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 182 175 202 202 210 210 Beginning Stocks 49 49 55 55 80 80 Milled Production 590 590 690 690 725 700 Rough Production 908 908 1,062 1,062 1,115 1,077 Milling Rate (.9999) 6,500 6,500 6,500 6,500 6,500 6,500 MY Imports 240 240 160 160 130 130 TY Imports 240 240 160 160 130 130 TY Imp. from U.S. 2 3 0 0 0 0 Total Supply 879 879 905 905 935 910 MY Exports 154 154 125 125 150 150 TY Exports 154 154 125 125 150 150 Consumption and Residual 670 670 700 700 700 680 Ending Stocks 55 55 80 80 85 80 Total Distribution 879 879 905 905 935 910 1000 HA, 1000 MT, MT/HA
Posted: 27 November 2011

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