May 12, 2011

 

Russia's return to wheat exports could double next season

 

 

Wheat exports from Russia could double next season, assuming that the devastating drought of 2010 does not return.

 

The USDA, in its first forecast for world wheat production and trade in 2011-12, estimated exports from producers such as Kazakhstan, Russia, and Ukraine rebounding to 26.3 million tonnes, from a drought-depressed 13.1 million tonnes this season.

 

The recovery will still leave exports from a bloc renowned for its fierce competitiveness in export markets well below highs reached at the end of the last decade.

 

Nonetheless, the USDA, in its influential Wasde report, cited "increasing competition" from Russia in forecasting an 18% slide, to 28.6 million tonnes (1.05 billion bushels), in US wheat exports in 2011-12.

 

And it forecasts EU exports tumbling 19% to a four-year low of 18 million tonnes.

 

However, the decline in European shipments will be reflected only in part in rising stocks, with the region's own livestock industry swallowing an increasing proportion of a crop which, at 136.6 million tonnes, was pegged below some other estimates.

 

Strategie Grains has estimated the crop at 143.6 million tonnes, with the USDA's European attaches coming up with a 141.25 million-tonne number.

 

"Dryness prevailed in northern Europe during March and April and continues into May, with far below-normal precipitation levels and much-above-average temperatures," the department said.

 

"Dryness is reportedly interfering with fertilizer uptake by crops. Both wheat and rapeseed crops need rainfall soon to prevent sharp yield reductions in northern France, northern Germany, England, and western Poland," it said.

 

In Russia, meanwhile, although autumn sowings had proved disappointing, "winterkill is likely to be considerably lower than last year which will mitigate the impact of the sharp reduction in planted area", the USDA said.

 

"Winter crops have resumed vegetative growth throughout European Russia, and satellite-derived vegetative indices indicate that conditions are generally above average in the south and below average farther north," it said.

 

The Wasde also highlighted static world demand for wheat imports, thanks largely to lower needs in North Africa, where many countries are expecting better crops this year.