May 29, 2007

 

Russia's 2007/2008 grain exports seen to drop due to drought

 

 

Grain exports by Russia for crop year 2007/2008 crop year are expected to decline due to drought as well as higher domestic animal-feed demand and lower stocks, analysts said on Monday (May 28).

 

Andrei Sizov Sr., CEO of leading Russian agricultural analysts SovEcon said the first ten days of June would be critical for the country's grain production as the continuous hot and weather would cause an extensive damage for the crops.

 

The absence of rain in the second half of May has led to severe drop of soil moisture in southern Russia and territories along the the Volga river-Russia's major grain-growing regions.

 

Sizov said SovEcon has remained its earlier forecast for the 2007 grain crop at 77 million to 81 million tonnes, compared to 78.6 million tonnes in 2006 as winter grains have been able to resist the heat.

 

But a critical shortage of soil moisture due to drought could damage spring grain, mainly spring barley.

Russia's Agriculture Ministry said on Monday (May 28) the country had sown 25 million hectares with spring grains, 80 percent of the targeted area and practically the same area as a year ago.

 

Sizov said SovEcon expected the area to be sown this year to stay at last year's level of 43.3 million hectares, as lower winter-kill losses will increase the harvesting area for winter grains, while the spring sowing area will decline.

 

Russia officially expects to harvest 76-79 million tonnes of grain this year. Most participants at the meeting expected the crop to be in the range of 75-78 million tonnes.

 

Sizov said SovEcon had increased its forecast for this season's grain exports and slashed projections for exports next season due to lower end-of-season stocks and an expected rise in consumption of grain for feed purposes.

 

High grain exports in March, April and May has end stocks of 9.3 million tonnes, compared to 10.2 million last season. These figures had SovEcon change the 2006/2007 (July 1 to June 30) export volumes to 12.4 million tonnes from a previous 11.8 million and 2007/2008 volumes to 12 million tonnes from 12.7 million.

 

Anatoly Manellya, deputy director of the government's Centre for Economic Trends, said he expects Russia's export capacity in 2007/08 is pegged at 11 to 12 million tonnes with a grain crop of 80 to 81 million tonnes.

 

However, export resources will decline if a strong drought occurs.

 

For wheat, Sizov estimated exports in 2007/08 at 10.7 million tonnes compared to 10.75 million in 2006/07 and barley exports at 1.2 million tonnes, down from 1.6 million in the current season.

 

He said grain consumption for animal feed will increase by 2 million tonnes in 2007 against the current season to 38 million tones from 36 million tonnes.

 

Manellya said that grain consumption for feed could rise even further by 37.5 million tonnes. He added the Russian agriculture ministry believes the animal feed sector will require 3 million tonnes which will have an additional stock of 40 million tonnes.

 

Sizov said SovEcon expected this year's corn crop to increase by 0.35 million tonnes from 0.25 million last year.