Grain and Feed Annual

An Expert's View about Cereals, Leguminous Crops, Oil Seeds in Russia

Last updated: 4 Apr 2011

In MY 2011, Russia’s grain production might recover to 84 MMT, including 52.5 MMT of wheat and 16 MMT of barley.

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: 3/24/2011 GAIN Report Number: RS1113 Russian Federation Grain and Feed Annual Annual 2011 Approved By: Scott Reynolds Prepared By: Mary Ellen Smith and Yelena Vassilieva Report Highlights: In MY 2011, Russia?s grain production might recover to 84 MMT, including 52.5 MMT of wheat and 16 MMT of barley. If production reaches this volume, the ban on grain exports might be partially lifted and Russia?s exports could reach 6 MMT. Domestic grain consumption is forecast to reach 75 MMT compared to 66 MMT in the current marketing year. Feed grain consumption is forecasted to recover to 42 MMT. Food and industrial consumption of grain is forecast at 34 MMT. Executive Summary: Assuming average weather, FAS Moscow forecasts Russia?s grain production will reach 84 million metric tons (MMT) in MY 2011 up from the 61 MMT from the drought afflicted crop of 2010. While total area sown to grain will only slightly increase, the yields are expected to improve. Wheat production might increase by 27 percent to 52.5 MMT, because of good agricultural practices in the Southern Federal District and West Siberia. Improved yields are also expected in the Volga Valley, Central and Southern Ural regions, which suffered from severe drought in 2010. The barley crop is forecasted to double from the record low crop in 2010, and may reach 16 MMT. The increase will result from an increased area sown for barley, and significantly better yields than in the drought year 2010. Corn production is forecast to increase by 24 percent due to a slightly increased area and better yields. Practically all farmers, including grain farmers, have significant outstanding debts inherited from 2007- 2009, when they were increasing investments in agricultural production with the aid of subsidized credits. Given the increased grain prices in MY 2010, the returns of farmers in some provinces might increase; and those farmers may increase investments in grain production. The resumption of grain exports may be phased in gradually. We are likely to see shipments on government-to-government terms and increased exports of wheat flour. FAS Moscow forecasts grain exports in MY 2011 at 5.5 MMT, 1 MMT more than in MY 2010, when grain exports were abruptly stopped on August 15, 2010 by the export ban. Grain imports will return to the normal 1 MMT, from approximately 1.4 MMT in MY 2010. Domestic food and industrial consumption will increase by 1.5 MMT to 34 MMT, and domestic feed consumption (including losses) is forecasted to increase to 41.5 MMT from the 33 MMT (5 year low) in MY 2010. The drop in feed consumption in 2010 was caused by high feed prices. The drought and feed shortage resulted in early slaughter and decreases in livestock. Recovery of feed demand will be based primarily on government support of the domestic meat and milk production through subsidized interest rates, direct subsidies and low interest rate loans to drought-affected provinces. End of year grain stocks might increase to 9 MMT from the estimated 6 MMT at the beginning of MY 2011. Given that 2011 is an election year for the Duma, and the presidential elections will be in March 2012, government policy might be fragmented, inconsistent, and dependent on the image of the Unity Party and its leaders, rather than focused on long-term investments. Thus, political factors will influence the marketing of grain and the government policy will be less predictable. Table 1. Post?s Forecast for MY 2011/2012, 1,000 Metric Tons, 1,000 Hectares TOTAL Wheat Barley Corn Rye Oats Millet Rice Other GRAIN Area Harvested 25,000 8,000 1,200 1,800 3,000 250 210 2,100 41,560 Beginning Stocks 5,039 708 135 110 173 0 89 50 6,300 Production 52,500 16,100 3,800 3,500 4,500 220 702 2,000 83,700 MY Imports 300 200 300 0 0 0 130 50 980 TY Imports 300 200 300 0 0 0 130 0 980 TY Imp. from U.S. 0 0 40 0 0 0 0 0 40 Total Supply 57,839 17,008 4,235 3,610 4,673 220 921 2,050 90,606 MY Exports 4,500 800 100 0 0 0 130 0 5,530 TY Exports 4,500 800 100 0 0 0 130 0 5,530 Feed Consumption 23,500 9,900 3,500 600 3,100 80 0 850 41,530 FSI Consumption 23,000 4,400 500 2,800 1,400 140 700 1,200 34,140 Total Consumption 46,500 14,300 4,000 3,400 4,500 220 700 2,050 75,670 Ending Stocks 6,839 1,908 135 210 173 0 91 50 9,406 Total Distribution 57,839 17,008 4,235 3,610 4,673 220 921 2,050 90,606 Yield 2.10 2.01 3.17 1.94 1.50 0.88 5.14 0.95 2.01 Note: The table is composed of PSD forecasts for each crop. The total production is higher than the sum of all crops because rice in the table is ?milled rice?, while the total includes rough rice, and the difference is forecast at 378 MT. Commodities: Wheat Barley Corn Rye Oats Millet Rice, Milled Production: FAS Moscow forecasts Russia?s total grain production in MY 2011 will equal 84 MMT, including 52.5 MMT of wheat, 16 MMT of barley, 4 MMT of corn, 3.5 MMT of rye, 4.5 MMT of oats, and approximately 3 MMT of other grains. The total forecasted grain production will slightly exceed the 7- year average (Table 2), and will be 38 percent higher than in 2010, which was one of the driest years in European Russia. The recovery of grain production will primarily depend on the weather, though it is unlikely that severe drought will strike European Russia for the third year in a row. In 2009, drought was reported in almost 20 provinces of European Russia, and in 2010, crops were lost in 43 provinces, covering over 30 percent of Russia?s grain area. Additionally, farmers? financial constraints, increased prices for input supplies, seed shortages in the drought-affected provinces, and uncertainties in government policies may prevent farmers from investing in improved technologies, seeds, and in some provinces financial constraints may affect sown area. Thus, Russia?s average yields for most crops will not exceed their 5-7 year averages, but some provinces (i.e. in the European South) will be much better than others (i.e. in the Volga Valley). Table 2. Grain Area and Production, 2004 ? 2010, 1,000 MT, 1,000 Hectares 2004 2005 2006 2007 2008 2009 2010 Average (prelim) 2004-2010 Planted Area, 1,000 Hectares Wheat, total 24,030 25,399 23,640 24,382 26,633 28,698 26,614 25,628 - winter 8,999 10,363 8,985 10,597 12,692 13,835 12,699 11,167 - spring 15,004 14,979 14,606 13,785 13,941 14,863 13.915 14,442 Barley, total 9,980 9,137 9,990 9,618 9,621 9,035 7,214 9,228 - winter 549 493 488 537 651 582 461 537 - spring 9,383 8,589 9,440 9,081 8,970 8,553 6,753 8,681 Rye (winter) 1,883 2,333 1,781 2,097 2,162 2,142 1,757 2,022 Oats (spring) 3,556 3,325 3,586 3,548 3,561 3,374 2,895 3,406 Corn for grain 877 820 1,031 1,509 1,812 1,365 1,416 1,261 Rice 132 144 163 162 164 183 203 164 Millet 1,026 499 668 506 572 522 521 616 Buckwheat 938 917 1,164 1,301 1,113 932 1,080 1,064 Legumes 1,213 1,103 1,211 1,094 1,006 1,080 1,305 1,145 Total 43,597 43,593 43,174 44,265 46,742 47,553 43,194 44,588 Harvested Area, 1,000 Hectares Wheat, total 22,936 24,714 23,080 23,519 26,027 26,612 21,732 24,088 - winter 8,826 10,230 8,820 10,178 12,594 13,432 11,207 10,755 - spring 14,105 14,420 14,203 13,327 13,507 13,249 10,545 13,337 Barley, total 9,544 8,724 9,605 8,376 9,410 7,741 4,970 8,339 - winter 533 483 478 526 646 560 446 525 - spring 9,040 8,223 9,122 7,834 8,793 7,160 4,516 7,813 Rye 1,865 2,311 1,734 2,034 2,135 2,091 1,371 1,936 Oats (spring) 3,281 3,170 3,320 3,317 3,412 3,017 2,236 3,108 Corn for grain 3,414 834 1,014 1,349 1,727 1,123 1,028 1,498 Rice 125 137 156 157 160 178 201 159 Millet 939 407 577 376 515 265 172 464 Buckwheat 867 830 1,069 1,196 1,004 627 575 881 Legumes 1,157 1,058 1,103 923 975 927 986 1,018 Total 41,538 42,262 41,601 41,311 45,453 42,780 33,311 41,180 Yields, Metric Tons per Harvested Hectare Wheat, total 1.98 1.93 1.95 2.1 2.45 2.32 1.91 2.09 - winter 2.94 2.83 2.8 2.81 3.39 2.9 2.49 2.88 - spring 1.38 1.3 1.43 1.56 1.56 1.72 1.29 1.46 Barley, total 1.8 1.81 1.89 1.87 2.46 2.31 1.68 1.97 - winter 3.74 3.24 3.63 3.86 4.12 3.67 3.74 3.71 - spring 1.68 1.73 1.8 1.74 2.33 2.21 1.48 1.85 Rye (winter) 1.54 1.57 1.71 1.92 2.11 2.07 1.19 1.73 Oats (spring) 1.51 1.44 1.47 1.63 1.71 1.79 1.44 1.57 Corn for grain 1.03 3.85 3.62 2.93 3.87 3.53 3 3.12 Rice 3.77 4.2 4.39 4.51 4.62 5.14 5.28 4.56 Millet 1.19 1.12 1.04 1.12 1.38 1 0.78 1.09 Buckwheat 0.75 0.73 0.81 0.84 0.92 0.9 0.59 0.79 Legumes 1.62 1.54 1.6 1.41 1.84 1.65 1.39 1.58 Total 1.88 1.85 1.89 1.98 2.38 2.27 1.83 2.01 Production, 1,000 Metric Tons Wheat, total 45,413 47,698 45,006 49,390 63,765 61,740 41,508 50,646 - winter 25,948 28,952 24,695 28,600 42,694 38,952 27,905 31,107 - spring 19,465 18,746 20,311 20,790 21,071 22,788 13,603 19,539 Barley, total 17,180 15,791 18,154 15,663 23,148 17,881 8,350 16,595 - winter 1,992 1,566 1,735 2,031 2,660 2,057 1,667 1,958 - spring 15,188 14,225 16,419 13,632 20,488 15,824 6,683 14,637 Rye (winter) 2,872 3,628 2,965 3,905 4,505 4,329 1,632 3,405 Oats (spring) 4,955 4,565 4,880 5,407 5,835 5,401 3,220 4,895 Corn for grain 3,516 3,211 3,669 3,953 6,682 3,963 3,084 4,011 Rice 471 575 686 709 738 913 1,061 736 Millet 1,117 456 600 421 711 265 134 529 Buckwheat 650 606 866 1,005 924 564 339 708 Legumes 1,875 1,630 1,764 1,301 1,794 1,529 1,371 1,609 Other 43 25 35 42 77 526 261 144 Total 78,092 78,185 78,625 81,796 108,179 97,111 60,960 83,278 Source: State Statistical Service (Rosstat). Note: Harvested area is calculated by Post on the basis of production data and yields per harvested area (official Rosstat data). Some ?Total? may differ from the sum of all grains due to possible re-sowing or over-sowing of winter area in spring with the same, or some other crops. Sown Area The Russian Agriculture Minister reports that in fall 2010 farmers planted winter grain on only 15.5 million hectares, 3.2 million hectares less than last year. The area sown for winter crops decreased in all federal districts except the North Caucasian Federal District, where it remained the same. The biggest, almost 30 percent, decrease in winter grain area was in the Volga Valley Federal District. This region reported that only 4.3 million hectares were sown for winter grain. Some sources consider that the actual sown area in this region was even smaller, because the soil in the fall remained very dry, and farmers did not risk their scarce (after drought) seeds and other resources by planting in the dry soil. However, the local administrations reported higher area sown in order to receive greater federal support. According to experts, the share of winter wheat slightly decreased, while the share of winter barley and winter rye increased. In the South, winter grain survival has been good so far, while in many Volga Valley provinces, farmers reported poor conditions for winter crops. The Agricultural Minister estimated that in order to compensate for the decreased winter area, Russian farmers will increase spring sowing by at least 1.5 million hectares over 2010 levels. The Agricultural Ministry intends to tie assistance such as distribution of subsidized fuel and fertilizer to their spring plantings. Most Russian grain farmers still adhere to crop rotations, and will hardly change these patterns despite the lure of subsidies. More likely, producers will report the balances required by the Ministry of Agriculture but continue planting according to their preferences. The current domestic grain prices are high and attractive for farmers, but the variability of these prices in the last four years was very high (Graph 1 and Graph 2). With limited resources farmers might prefer increasing oilseed production and the production of legumes and perennial grasses that provide more stable returns. Input Supply The input supply situation is not favorable for expanded grain sowing in 2011. Fuel Prices of fertilizer and fuel were growing rapidly at the end of 2010. In 2010, the price of diesel fuel increased by 35.5 percent, and the price of gas (motor fuel) increased by 10.7 percent. In January 2011, price increases continued to accelerate. Meanwhile, farmers in many provinces were unable to accumulate fuel stocks in 2010 for spring sowing. In some provinces, the price of motor fuel increased to 26,000 rubles ($870) per metric ton (MT). In February 2011, the Russian government extended fuel price discounts for farmers through 2011. The discount is 10 percent off of the price of fuel as of November 2010 (for more information see GAIN report Government Approved Fuel Prices Discount for Farmers for 2011 _ Moscow _ Russian Federation _ 2/17/2011). However, the delivery of subsidized fuel to farmers is lagging behind even in the Southern Federal District, where farmers began spring field work and sowing in March. The Ministry of Agriculture, through local administrations, is trying to influence farmers? planting decisions by monitoring the distribution of subsidized fuel, thereby causing further delays. At the same time, the market price of fuel keeps increasing. Fertilizer and Agrochemicals Prices of fertilizer and agrochemicals are increasing while the federal funds for fertilizer subsidies shrank. Although the government promised to restore 6 billion rubles ($200 million) for fertilizer subsidies, no action has yet been taken. The Russian fertilizer monopolies export over 80 percent of their fertilizer and robust world market demand has increased prices. Meanwhile, most Russian farmers, burdened with outstanding debts and very low capital, prefer the cheapest fertilizer over the most effective. As for agrochemicals, rising prices in 2011 will cause many farmers to minimize the use of agrochemicals, and they will prefer the cheapest, not branded chemicals. If grain prices remain high throughout 2011, the situation might improve in fall 2011 for the 2012 grain crop. Seeds Shortage of good quality planting seeds is one of the major restrictions for spring sowing 2011. Saved seeds comprise a significant portion of Russia?s planting seeds for grain. Drought-affected provinces, especially in the Volga Valley will have a shortage of quality seeds. In February 2011, administrations complained that the availability of planting seeds for spring sowing is lower than in previous years. The federal government subsidizes seed breeding (Elite Seeds Program), but the reproduction of these seeds and their commercialization is not supported by the government. As a result, the market price of high quality seeds remains unaffordable for the majority of Russian grain farmers. Most farmers cannot afford improved seeds not only because these seeds are expensive, but because they show their effectiveness only in conjunction with appropriate technologies, fertilizer, chemicals, etc., which farmers cannot afford this year. Biotech seeds are not allowed to be planted in Russia. Domestic seed breeding is improving slowly because many seed breeding centers are short on financing and specialists. In Tatarstan Republic they started experiments on the irradiation of grain planting seeds. These seeds show better results, but environmentalists have already launched a campaign against possible radioactive contamination of plants and the environment. In Russia, the quality of seeds remains one of the major problems that hamper yield increases. Use of imported seeds is limited because these seeds remain more expensive than domestic varieties and hybrids. Besides, most imported seeds, included branded seeds, are not suited for Russia?s territories, climate, and soil. In 2010, farmers complained that imported seeds showed worse results in the drought conditions than the less productive but more reliable local varieties. Machines and equipment Due to the financial constraints of 2009, and the drought induced losses in 2010, Russian farmers were not able to improve their fleet of machines and equipment in 2010. Most machines were purchased and improvements made in 2007-2009, through the use of borrowed money and leases. High import duties on imported equipment and machines raised the prices of these agricultural machines to unaffordable levels, and prices of domestic machines followed. Although Rosagroleasing continues to supply farmers with domestically produced machines at a subsidized rate, farmers? purchases are decreasing, and their debts for these machines are growing. Storage According to official data, Russia?s total grain storage capacity is 118.2 MMT, including 32.9 MMT of grain elevators? capacity. However, experts estimate the condition of 70-80 percent of Russia?s storage capacity is bad. The location of most elevators and storage still reflects the patterns developed in the former planned economy and there are more storage facilities in the grain consuming areas and less in grain producing areas. Experts consider that grain storage remains one of the bottlenecks of Russia?s grain industry, and the capacity, condition and location of storage is not ready for a grain crop exceeding 100 MMT. The high cost of transportation of grain is another factor that complicates logistics. In provinces that were not affected by drought, inadequate storage may be one of the limiting factors for increasing grain production in 2011. Thus, in southern Russia, farmers and traders complain that warehouses and elevators are still filled with grain and cleaning and preparation for storage of next year?s crop is slow. Finance The drought significantly decreased farmers? overall returns from agriculture in 2010, even compared with the low returns in 2009. The regional diversity in returns in 2010 is extreme. In the drought affected regions, farmers? losses were very high and limited insurance programs did not provide a safety net. Experts believe that in the Volga Valley, many farmers will not be able to increase grain sowing in spring, and some of them are ready to stop farming completely. In the Southern and Siberian provinces where the 2010 grain crop was successful, farmers? returns were healthy. In 2007-2008 farmers in the Southern European Russia were making significant investments in agriculture, including grain and oilseeds production. These investments were highly leveraged and by 2010 most farmers accumulated large debts. Before 2010, farmers in Southern European Russia targeted their grain for export markets, and although prices were relatively low, these markets were reliable, safe, and growing. The export ban of August 15, 2010 cut these farmers off from the export markets and reliable returns. Domestic prices began increasing in summer 2010, but the demand for grain was low until January 2011. In August ? October 2010, many farmers in the South were in drastic need of financing to start winter sowing and other field works, and many of them were selling wheat at $100 per MT or lower, while the world market price of wheat already reached $150-200 per MT. By spring 2011, although the domestic price of wheat increased to $250 per MT, many farmers had no grain to sell. A significant portion of reported remaining stocks of grain in the South already belong to traders and middlemen. Consumption: Feed consumption and losses FAS Moscow estimated that grain feed and residual consumption in MY 2010 dropped by approximately 8 MMT to 33 MMT due to the drought. Drought caused an increase in feed prices and a decrease in livestock herds (cattle and pigs). In some provinces, drought and fires caused direct losses of animals. Almost everywhere, high feed prices resulted in increased slaughter at private households, which represent from 33 percent (pigs) to 47 percent (cattle) of livestock herds. By December 2010, the total number of cattle in Russia decreased by 3 percent, while the number of pigs, sheep and goats decreased by 1 percent. Post estimates that the residual?s share decreased and the actual feed consumption of grain was approximately 4 MMT lower than in MY 2009. Meanwhile, the high prices of feeds will stimulate industrial, large poultry, pig and dairy farmers to increase the effectiveness of feeding and to continue to optimize feed rations. Along with decreasing the grain component in feeds they increased the feed conversion ratio by increasing the use of other ingredients, such as proteins, vitamins, premixes, etc. In December 2010, the Russian Ministry of Agriculture adopted a Program of Development for the Feeding Industry. However, financing of this program has not started and it will hardly bring any results in 2011. More information on the status of the feed industry in Russia and the plans of the Russian Agricultural Ministry to develop this industry is in the GAIN report RS1070 _ Feed Sector Update _ Moscow _ Russian Federation _ 12/16/2010. High feed prices may stimulate the shift of Russia?s livestock industry to more effective feeding patterns and to increased productivity in the future. Continued government support of the livestock industry may result in its restoration and increased efficiency in the upcoming years. Already in 2011, demand for feeds is forecast to increase, and FAS Moscow forecasts feed grain consumption to rise to 41 MMT. Food and Industrial Consumption Food consumption was unaffected in 2010, although food grain price increases caused increases in the price of flour, and some groats, such as buckwheat and millet. Consumer food prices were subject to government price-curbing measures. The government distributed small quantities of milling wheat to flour mills in St. Petersburg and in Moscow from the state Grain Intervention Fund. However, prices had little effect on the levels of food consumption of grain. Industrial consumption of Russian grain for the production of malt and starches decreased slightly, but the decrease in production was offset by increased imports of processed grain products, and total food and industrial consumption did not drop in MY 2010. FAS Moscow forecasts that in MY 2010 food and industrial consumption may slightly increase to 34 MMT from 33 MMT in 2010. Trade: By February 2011, Russia?s total grain exports, including wheat flour (in grain equivalent) and malt in grain equivalent, almost reached 3.9 MMT. Wheat flour exports began increasing in January 2011, when the ban on flour was lifted, and total grain exports in MY 2010 are estimated at 4.2 MMT. Major importers of Russian grain in MY 2010 (mostly in July ? August 2010) were Egypt (1.6 MMT) and Turkey (0.6 MMT). Saudi Arabia, Israel, Armenia, Libya, Yemen, Azerbaijan and Georgia imported from 100,000 to 200,000 MT of grain each. Table 3. Russia's Grain Exports, July 2010 - January 2011, Metric Tons 07/2010 08/2010 09/2010 10/2010 11/2010 12/2010 01/2011 TOTAL Total 1,938,580 1,700,046 6,362 36,384 37,996 67,571 19,220 3,806,159 Wheat and Meslin 1,717,792 1,584,384 2,510 5,000 12,295 11,153 0 3,333,134 Barley 166,703 99,656 0 0 0 0 0 266,359 Oats 0 0 442 189 94 425 127 1,277 Corn 44,278 9,711 0 0 0 0 0 53,989 Rice 9,807 2,574 1,850 30,242 25,608 55,914 19,093 145,088 Other 0 3,721 1,559 952 0 80 0 6,312 Wheat or Meslin Flour 14,359 3,665 2,290 1,077 2,829 1,560 10,430 36,210 Flour as grain (K=1.368) 19,643 5,014 3,133 1,473 3,870 2,134 14,268 49,535 Malt 4,739 4,695 1,028 503 493 746 730 12,934 Malt as barley (K=1.343) 6,364 6,305 1,381 676 662 1,002 980 17,370 Source: Global Trade Atlas By February 2011, Russia imported approximately 360,000 MT of grain, flour and malt. Beginning in January 2011, data does not show imports of grain from Kazakhstan, but the total volumes of grain imports from Kazakhstan are small, and experts consider that the border trade in grain with Kazakhstan this year is smaller than in previous years. In addition to rice, Russia?s traditional import, in MY 2010 Russia is importing barley and malt. Assuming that by the end of MY 2010 Russian imports maintain the rate of the previous seven months, the total MY grain imports might increase to 1 MMT, mostly barley and malt. In the middle of March, 2011, Russia?s major grain exporters created the Grain Exporters Association in order to lobby for Russian grain exports, but it is not clear what the program of this association will be and how it will coordinate its activities with the two other grain associations - Russia?s Grain Union and the Association of Grain Producers of Russia. Table 4. Russia?s Grain Imports, July 2010 ? January 2011, 1,000 Metric Tons 07/2010 08/2010 09/2010 10/2010 11/2010 12/2010 01/2011 TOTAL Total 8,397 15,531 33,478 50,874 65,891 68,002 36,637 278,810 Wheat and Meslin 3,609 42 1,472 110 20 0 0 5,253 Rye 114 56 11 0 0 0 0 181 Barley 1 1,508 5,451 15,942 39,822 40,042 19,716 122,482 Corn 350 209 153 662 1,628 3,279 3,329 9,610 Rice 4,296 13,716 26,365 34,159 24,227 24,180 12,478 139,421 Other 29 0 26 1 193 502 1,113 1,864 Wheat or Meslin Flour 427 721 548 409 483 639 317 3,544 - Flour as grain (K=1.368) 584 986 750 560 661 874 434 4,848 Cereal Flour Other 584 459 620 975 815 769 417 4,639 - Other flour as grain (K=1.368) 799 628 848 1,334 1,115 1,052 570 6,346 Malt 6,673 7,513 12,789 7,003 6,760 5,547 4,601 50,886 - Malt as barley (K=1.343) 8,962 10,090 17,176 9,405 9,079 7,450 6,179 68,340 Wheat FAS Moscow estimates wheat exports in MY 2010 at 4.2 MMT. Exports from July 2010 ? January 2011 were 3,383,000 MT, including 3,333,000 MT of wheat and meslin and 50,000 MT of wheat flour in grain equivalent. 99 percent of wheat and 50 percent of wheat flour were exported in July-August 2010, before the ban. However, since January the ban on flour exports was lifted, and traders began shipping flour, so the total MY exports of wheat flour in grain equivalent might reach 120,000 MT. Some humanitarian or government agreements? based wheat shipments might happen before the end of the marketing year to round up total wheat exports to 4.2 MMT. In MY 2011 FAS Moscow forecasts wheat exports, including flour in grain equivalent at 4.5 MMT. Despite the low domestic crop, wheat imports have been slow, and FAS Moscow estimates them at 200,000 MT in MY 2010, including, 100,000 MT of wheat flour in grain equivalent. In July 2010 ? January 2011, Russia imported only 5,000 MT of wheat and 5,000 MT of wheat flour in grain equivalent. However, imports of wheat and flour might increase in spring. In MY 2011 FAS Moscow forecasts wheat imports at 0.3 MMT. Barley Given that by February 2011, Russia imported 190,000 MT of barley (including 68,000 MT of malt in grain equivalent), and that barley imports slowed down in winter, FAS Moscow estimates total barley imports at 400,000 MT. Most imports in the remaining five months will be malting barley or malt. Exports of barley are estimated at 300,000 MT, given that by February 2011, Russia already exported almost 285,000 MT of barley and malt (in grain equivalent) and that barley grain exports were completely discontinued in September 2010. For MY 2011, if the barley crop returns to 16 MMT, exports of barley might increase to 0.8 MMT, while imports will decrease to 0.2 MMT (exclusively for malt industry). Corn The corn price in the international market remains too high for Russian feed millers, and imports of corn from Ukraine is subject to Ukrainian export restrictions. Thus, the total imports of corn in MY 2010 (begins in October) is estimated at 0.3 MMT. Given that corn remains one of the main ingredients for feeding Russia?s still expanding poultry industry, its imports may continue at 0.3 MMT in MY 2011 despite restored domestic production. According to Ukrainian experts, Ukraine may lift restrictions on corn exports in spring 2011, and if this happens, Russia may increase imports of corn from Ukraine. Volumes of imports will depend on the price of imported corn vs. the price of Russia?s feed quality wheat, which, according to specialists, has already replaced corn in feeding poultry in many Russian poultry farms this year. Other Grains In MY 2011 Russia may continue reducing rice imports, but it might slightly increase exports of rice, buckwheat and niche grains like chick peas. However, trade in these grains will remain low. Stocks: FAS Moscow forecasts Russia?s grain carry-over stocks to increase to 9 MMT, by the end of MY 2011 from the estimated 6 MMT at the beginning of the year. This includes the grain stocks in the State Grain Intervention Fund, which are forecast at 3 MMT in the beginning of MY 2011 (6.5 MMT less than in the beginning of MY 2010), and are forecast to remain at the same level through the end of MY 2011. As of March 2011, grain stored in the Intervention Fund totaled 9 MMT. Russia?s statistical data on stocks is only reliable in the portion of grain stored in the Intervention Fund. Russian State Statistical Service (Rosstat) continues collecting data on stored grain, but the consistency of this data was disrupted in the summer 2010, when it began estimating grain stored at private household farms. In addition, the accuracy of private stockholders? reports is not controlled. Since the liquidation of the State Grain Inspectorate several years ago, control of the quality and the quantity of grain at private elevators and warehouses has ceased. As of March 1, 2011, Rosstat reported that grain stocks at agricultural, grain storing, and processing enterprises were 28.3 MMT (22 percent less than on March 1, 2010), including 12.3 MMT were stored at agricultural enterprises (35.5 percent less than on March 1, 2010) and 16 MMT were stored at elevators and processing enterprises (7 percent less than a year ago). Despite lower current stocks of grain, the monthly consumption of these stocks in January and February was slower than in 2010 due to the export ban. Moreover, the uncertain government grain marketing policy, and the proposed direct distribution of grain from the State Intervention Fund adversely affected domestic sales and the monthly decrease of stocks. Since January 1, 2011 grain stocks decreased by 5 MMT, or 2.5 MMT monthly. However, the farmers? necessity to finance spring works, on one hand, and diminishing grain and feeds reserves at poultry and livestock farms and feed and flour mills will increase stocks? consumption. Given that the average monthly grain consumption in Russia in MY 2010 is estimated at 5.0-5.5 MMT [i] , by July 1, 2011, Russia?s carry-over stocks will decrease by 20-22 MMT from the current 28 MMT. FAS Moscow estimates beginning of MY 2011 stocks at 6 MMT. [i] Sum of domestic feed, food and industrial consumption in MY 2010 divided by 12 months Policy: Russia?s officials declare that their policy in 2011 will be aimed at guaranteeing livestock industry growth and resuming exports. In order to achieve these targets, at the end of 2010 and the beginning of 2011, the government adopted a set of measures aimed at restoring grain crop production in 2011 to 80- 87 MMT. These measures include regulating fuel prices, federal subsidies and loans to drought- affected provinces interest rate subsidies, and dispersing funds to state banks (Rosselkhozbank and Sberbank) to restructure farmers? debts and to soften lending policy. According to the First Deputy Prime Minister Viktor Zubkov, for spring sowing agricultural producers will receive 220 billion rubles ($7.3 billion), including 150 billion rubles ($5 billion) of loans from the state banks. Rosselkhozbank reserved 105 billion rubles ($3.5 billion) for this purpose and Sberbank reserved 45 billion rubles ($1.5 billion). More information on the government measures aimed at restoring grain production is in the GAIN report RS 1106 _ Agriculture Development Program in 2010 and Priorities for 2011 _ Moscow _ Russian Federation _ 1/26/2011. However, the implementation of these policies is lagging behind farmers? spring needs. The short-term government measures are controversial and dominated by political and social considerations in the pre-election year. Thus, there is no information or any certainty when or on what conditions the export ban will be lifted, or what government export regulations may replace it. The unpredictability of short-term government policy creates uncertainties in the domestic grain market and hampers farmers? decisions and abilities to develop grain production in 2011. Since February, the government has auctioned 670,000 MT from the State Intervention Fund. Most of this grain is milling wheat (Class 3 and 4). Since March, sales of feed grain (fodder barley and feed wheat Class 5) stopped, as the government intends to distribute this feed grain directly to the livestock producers (feed millers and farms) at the price of purchasing this grain in the Fund in the abundant years. The necessary government resolution on the direct distribution of grain has not been signed yet, but the government?s plans have already led to the suspension of farmers? sales of grain in the commercial market. Altogether, the government may distribute up to 2.5 MMT of feed grain from the Intervention Fund, but it is not clear, when this grain will actually reach consumers and what it will cost, considering that the elevators, and transport companies will charge fees for the delivery of grain from the storage places to consumers. At the same time, the auction sales and the distribution expectations have begun pushing market prices down (see Graphs 1 and 2). Marketing: Grain Prices Despite the sharp increase in domestic prices since July 2010, these prices have not yet reached the levels of MY 2007/2008, with the exception of malting barley prices (Graph 1). A catastrophic decrease in barley production caused skyrocketing prices of malting barley, which is physically unavailable in the market, and a sharp increase in feed barley prices, which in many cases led small brewers to mix feed barley with malting barley in malt production. By the end of February 2011, prices of most grain stabilized at a high level (Graph 2). Experts believe the current price of Russian wheat in the domestic market is approximately $100 less than the world market price. Because of the present export ban, the exchange rate with the dollar does not influence Russian grain exporters at the moment. In March, when the rumors of direct distribution of grain came true, grain prices began decreasing, but at a slow rate. The decrease is stimulated by the necessity of the farmers in the south of European Russia to sell as much grain as possible in order to prepare storage facilities for next year?s crop, and to get cash for the spring crop. Graph 1. Grain Prices, January 2008 ? March 2011 Soure: ProZerno Graph 2. Grain prices in European Russia in Rubles, July 2009 ? March 2011 Source: ProZerno Production, Supply and Demand Data Statistics: Table 5. PSD, Wheat 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 28,700 28,700 26,600 21,710 25,000 Beginning Stocks 10,561 10,479 11,869 11,869 5,039 Production 61,700 61,700 41,500 41,470 52,500 MY Imports 164 164 500 200 300 TY Imports 164 164 500 200 300 TY Imp. from U.S. 0 0 0 0 0 Total Supply 72,425 72,343 53,869 53,539 57,839 MY Exports 18,556 18,556 4,000 4,200 4,500 TY Exports 18,556 18,556 4,000 4,200 4,500 Feed and Residual 19,000 18,918 23,000 21,500 23,500 FSI Consumption 23,000 23,000 23,000 22,800 23,000 Total Consumption 42,000 41,918 46,000 44,300 46,500 Ending Stocks 11,869 11,869 3,869 5,039 6,839 Total Distribution 72,425 72,343 53,869 53,539 57,839 1000 HA, 1000 MT Table 6. PSD Barley 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 9,050 7,750 7,200 4,960 8,000 Beginning Stocks 3,637 3,637 2,088 2,088 708 Production 17,900 17,900 8,300 8,330 16,100 MY Imports 8 8 300 400 200 TY Imports 13 8 300 400 200 TY Imp. from U.S. 0 0 0 0 0 Total Supply 21,545 21,545 10,688 10,818 17,008 MY Exports 2,657 2,657 300 300 800 TY Exports 2,086 2,086 250 300 800 Feed and Residual 12,300 12,300 5,550 5,810 9,900 FSI Consumption 4,500 4,500 3,900 4,000 4,400 Total Consumption 16,800 16,800 9,450 9,810 14,300 Ending Stocks 2,088 2,088 938 708 1,908 Total Distribution 21,545 21,545 10,688 10,818 17,008 1000 HA, 1000 MT Table 7. PSD Corn 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 1,100 1,100 1,025 1,020 1,200 Beginning Stocks 287 287 160 160 135 Production 3,950 3,950 3,100 3,075 3,800 MY Imports 50 50 500 300 300 TY Imports 50 50 500 300 300 TY Imp. from U.S. 0 0 0 0 40 Total Supply 4,287 4,287 3,760 3,535 4,235 MY Exports 427 427 25 20 100 TY Exports 427 420 25 20 100 Feed and Residual 3,200 3,200 3,100 2,950 3,500 FSI Consumption 500 500 500 430 500 Total Consumption 3,700 3,700 3,600 3,380 4,000 Ending Stocks 160 160 135 135 135 Total Distribution 4,287 4,287 3,760 3,535 4,235 1000 HA, 1000 MT Table 8. PSD Rye 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 2,150 2,150 1,750 1,380 1,800 Beginning Stocks 297 297 260 260 110 Production 4,300 4,300 1,650 1,650 3,500 MY Imports 0 0 300 300 0 TY Imports 0 0 300 300 0 TY Imp. from U.S. 0 0 0 0 0 Total Supply 4,597 4,597 2,210 2,210 3,610 MY Exports 12 12 0 0 0 TY Exports 11 11 0 0 0 Feed and Residual 825 825 100 100 600 FSI Consumption 3,500 3,500 2,000 2,000 2,800 Total Consumption 4,325 4,325 2,100 2,100 3,400 Ending Stocks 260 260 110 110 210 Total Distribution 4,597 4,597 2,210 2,210 3,610 1000 HA, 1000 MT Table 9. PSD Oats 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 3,350 3,000 2,900 2,250 3,000 Beginning Stocks 581 581 378 378 173 Production 5,400 5,400 3,200 3,220 4,500 MY Imports 0 0 0 0 0 TY Imports 0 0 0 0 0 TY Imp. from U.S. 0 0 0 0 0 Total Supply 5,981 5,981 3,578 3,598 4,673 MY Exports 3 3 5 0 0 TY Exports 4 4 5 0 0 Feed and Residual 4,150 4,000 1,950 2,025 3,100 FSI Consumption 1,450 1,600 1,450 1,400 1,400 Total Consumption 5,600 5,600 3,400 3,425 4,500 Ending Stocks 378 378 173 173 173 Total Distribution 5,981 5,981 3,578 3,598 4,673 1000 HA, 1000 MT Table 10. PSD Millet 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 250 250 500 170 250 Beginning Stocks 0 0 0 0 0 Production 265 265 130 130 220 MY Imports 0 0 0 0 0 TY Imports 0 0 0 0 0 TY Imp. from U.S. 0 0 0 0 0 Total Supply 265 265 130 130 220 MY Exports 0 0 0 0 0 TY Exports 0 0 0 0 0 Feed and Residual 90 90 5 5 80 FSI Consumption 175 175 125 125 140 Total Consumption 265 265 130 130 220 Ending Stocks 0 0 0 0 0 Total Distribution 265 265 130 130 220 1000 HA, 1000 MT Table 11. PSD Rice, Milled Rice, Milled Russia 2009/2010 2010/2011 2011/2012 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 182 175 202 202 210 Beginning Stocks 49 49 55 69 89 Milled Production 590 590 690 690 702 Rough Production 908 908 1,062 1,062 1,080 Milling Rate (.9999) 6,500 6,500 6,500 6,500 6,500 MY Imports 220 220 200 150 130 TY Imports 220 220 200 150 130 TY Imp. from U.S. 0 3 0 0 0 Total Supply 859 859 945 909 921 MY Exports 154 120 120 120 130 TY Exports 154 120 120 120 130 Consumption and Residual 650 670 720 700 700 Ending Stocks 55 69 105 89 91 Total Distribution 859 859 945 909 921 1000 HA, 1000 MT
Posted: 04 April 2011, last updated 4 April 2011

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