February 8, 2008

Russia's 2007 grain production up 4 percent

Russia's grain production in 2007 was 81.8 million tonnes, 4 percent higher than 2006, according to the US Department of Agriculture.

The State Statistical Service of the Russian Federation published official data on grain production in 2007. The total grain crop is 81.8 million tonnes (MMT), 4 percent more than in 2006, including 49.4 MMT of wheat, 15.6 MMT of barley, 3.9 MMT of rye, 5.4 MMT of oats, 3.9 MMT of corn, 0.4 MMT of millet, 1.0 MMT of buckwheat, 0.7 MMT of rice, and 1.3 MMT of legumes.

From July 2007 through January 2008, Russia exported 13.0 MMT of grain and flour (in grain equivalent). Exports of wheat and barley will not continue February - April 2008 due to prohibitive export duties on these crops. However, export of wheat flour will continue, and may add another 0.4 MMT (in grain equivalent) to total MY 2007 grain exports. Given that Russia also increased exports of rye, the total MY 2008 grain exports is forecast at 13.7 MMT. Top quality milling wheat (class 3) prices increased from 6,285 rubles (US$258) per tonne in the end of December to 6,790 (US$278) rubles per tonne in the end of January 2008 (European Russia) despite continued grain interventions. From October 29, 2007 to January 29, 2008, 544,852 metric tonnes of class 3 wheat (or 43 percent of the intervention stock) and 53,531 metric tonnes of class 4 wheat (35 percent of intervention stock) were sold, but these sales did not curb market prices of milling wheat and wheat flour.

According to millers, the wheat flour price increased in January by 8 percent since the end of December 2007, and may stimulate further increase in bread prices. On January 31, major Russian producers and retailers will sign an agreement to extend price freezing on staple food products, including wheat and rye bread, until May 1, 2008.

The State Statistics Service also reported on economic growth in 2007. Gross domestic product grew by an annual 8.1 percent in 2007, exceeding the government's forecast and registering the fastest growth rate since 2000. Russia has entered its 10th consecutive year of growth. The average wage increased an annual 16.2 percent in 2007, reaching 18,467 rubles ($754) per month in December while retail sales grew 15.2 percent. Disposable income increased 10.4 percent last year, according to the State Statistics Service.

Winter grain is sown to 15.0 million hectares, a 15-percent increase from previous year, including 600,000 hectares of winter barley. January frost spells in the Sothern Federal District without adequate snow cover damaged plants on some fields, but the result of the damage is still difficult to estimate. Winter grain survival is still good in the Ural Federal District and in Siberia Federal District, with adequate snow cover.

From July through January, Russia exported 1.0 MMT of barley, but barley exports plummeted in December due to the imposition of a prohibitive export tariff (30 percent ad valorem but not less than 70 Euro per tonne), effective November 12, 2007 to April 30, 2008. Given the small barley crop, total barley exports in MY 2007 will should not exceed 1.1 MMT.

In July -December 2007, Russia exported 106,140 tonnes of rye (4.5 times more than in MY 2006). Russia's exports of corn in October - December 2007 were 23,545 metric tonnes, less than 50 percent of October - December 2006 exports.

Thus, despite prohibitive export tariffs on barley and wheat and meslin, Russia's total MY 2007 grain exports may exceed 13.7 MMT.
 

In July - December 2007, Russia imported 212,600 tonnes of wheat and flour (in grain equivalent), 89,000 metric tonnes of barley, and 128,301 tonnes of rice. Corn imports in October - December 2007 were 13,400 tonnes.