Highlights

Increased grain production due to increased acreage, better practices    Feed grain production in Russia by large companies unlikely    High quality seed harder to come by in Russia   Government to subsidize mineral fertilizer purchase

April 7, 2008

 

USDA predicts Russian grain exports to rise 8 percent on better production

 

 

Rising international prices for wheat and barley, and the existing foreign market for Russian grain is expected to push the country's grain exports to 14.5 million tonnes this year, an 8-percent increase compared to 2007, according to a USDA attache report.  

 

As large grain trading companies have increased investments in agricultural land in Russia due to high grain prices, grain production increases due to higher yields should follow, along with more land-conscious agronomic practices, the report said.

 

Given that most of these companies are exporters, increased grain production on their lands will result in a stable supply of grain exports, the report said.

 

However, very few of these companies have invested in livestock production; therefore, the dedication of company land investments to feed grain production is not likely.

 

Wheat and wheat flour exports (in grain equivalent) will constitute 89 percent of total grain exports, with the total volume of wheat (including flour) exports predicted to reach 12.8 million tonnes. Barley exports are forecast at 1.55 million tonnes, a nearly 43 percent increase from MY 2007. Russia will continue to export rye; however, rye exports will decrease by more than 42 percent from the estimated 130,000 mt in MY 2007. Russia's corn exports will be limited to small levels of trade with neighboring countries and will not exceed 10,000 mt. Rice exports will not exceed 15,000 mt.

 

Russian total grain production in marketing year 2008 is forecast to increase by 2.6 million tonnes to 84.5 million tonnes predominantly due to a 2.4 million hectare increase in area harvested and improved agronomic practices.

 

Area sown to winter crops increased by 2.0 million hectares due to high domestic and international demand for grain that increased prices. Specialists forecast that production of winter grain crops will reach 37-40 million tonnes due to increased area sown, although yields may be lower than in 2007.

 

Area sown to spring grains is also expected to increase over last year's levels. This comes at the expense of oilseeds and industrial crops, such as sugar beets.

 

Wheat will account for 61 percent of the total grain crop.

 

Grain imports will decline by 15,000 tonnes to 1.2 million tonnes. Given the increase of international prices for wheat and barley, and the existing foreign market for Russian grain, Russian grain exports are expected to increase by 8 percent to 14.5 million tonnes.

 

Domestic food grain consumption will remain at 20.25 million tonnes.

 

Feed consumption will likely increase by 1.06 million tonnes to 36.3 million tonnes.

 

This increase will still fall short of meeting livestock and poultry producer demands.

 

If the USDA forecast proves correct, prohibitive export duties will not be extended in MY 2008.

 

Furthermore, the government is unlikely to intervene by procuring grains as market prices, although decreased from the spring 2008 level, will remain attractive.

 

Wheat is expected to increase from 49.4 million tonnes to 51.2 million tonnes, while barley - from 15.7 million tonnes to 17.7 million tonnes.

 

Meanwhile, Russian corn production is forecast to decrease slightly from 3.95 million tonnes to 3.8 million tonnes due to a decrease in the area sown (spring wheat is expected to replace corn in many areas with historically low yields) and problems locating quality seed corn.

 

Rye and oat production will also decrease from 3.9 million tonnes and 5.4 million tonnes, in MY 2007, to 3.7 million tonnes and 4.9 million tonnes in 2008 as wheat and barley production expanded.

 

The Russian Ministry of Agriculture forecasts an increase in area sown to spring grains throughout Russia, but has yet to present definite estimates.

 

Due to increased farm incomes in 2007 and improved financing, the supply of inputs in spring 2008 is more robust than a year ago, in spite of the increased production costs.