August 17, 2010

Russia's drought may further affect grain crop

Agricultural analyst SovEcon has cut its 2010 grain crop forecast to 59.5-63.5 million tonnes from a previous forecast of 70-75 million tonnes, a day after Russia's first grain export ban for 11 years started.

Coming after last year's bumper 97 million tonne crop, Russia's worst drought in over a century has destroyed crops over large areas, sparking wildfires which have shrouded Moscow in smog for days, and forcing up world grain prices.

SovEcon estimated the area on which grains have been lost at 7.6 million hectares by August 1, potentially leaving the harvesting area at around 36 million hectares.

This may result in a 34-35 % decline in total grain production to 63-64 million tonnes. However, it may fall further to below 60 million tonnes under a more pessimistic scenario as the losses may prove to be bigger and yields lower.

SovEcon has already revised down its forecast for Russia's 2010 wheat crop by four million tonnes to 43-44 million.