July 19, 2010

Russian grain production seen below 75 million tonnes

As a severe drought advanced to new producing regions, SovEcon agricultural analysts revised their forecast for Russia's 2010 grain production further down to below 75 million tonnes from 77 million-81 million tonnes.

SovEcon kept its forecast for wheat crop at 49-51 million tonnes but cut it for barley crop to 11-13 million tonnes from the previous estimate of 12-14 million tonnes.

 
So far, Russia preliminarily estimated that grains had been lost on an area of nine million hectares or on nearly one-fifth of the total area sown to this year grain crop of 43.6 million hectares, down from last year's 47.55 hectares.

"In the next 7-10 days, when the harvesting starts in the majority of Russian regions except for Siberia and the Urals, the dimensions of the losses will become more evident," SovEcon said. "Practically every day of abnormally hot and dry weather cuts Russia's grain output further down."

It said in the last 10 days conditions for the crop development worsened and the dimensions of the territory heat by the drought rose. Regions along the Volga river were the main victims of the drought with temperatures of 33-36 degrees Celsius (91.4-96.8 degrees Fahrenheit). Soil drought hit 35-40% of land in the eastern part of the Central Federal District with moisture contents in the upper soil layer falling to less than 10 mm. In the south of the Urals Federal District moisture content fell to insufficient levels of 11-13 mm and even to 10 mm.

In the south of Russia, where the harvesting campaign is winding up, grain yields are above the high of last year's indicator and the crop there is expected to be close to last year's 28.9 million tonnes.

A rise of international grain prices will stimulate exports from Russia's southern regions located close to the main Black Sea ports but shipment volumes will start falling rapidly in the end of autumn as supply from adjacent Central and Volga regions dwindles.

SovEcon believes that the country's carry-over stocks officially estimated at 24 million tonnes, are in fact lower, as they were calculated by the start of June and not by the end of the 2009/10 crop year ended at June 30.

"Part of the stocks are located in Siberia and exports from this part of the country may prove to be inefficient because of high transportation costs," SovEcon said.

Russian Agriculture ministry has said it may recalculate the volume of the country's exportable grain surplus it has so far estimated at around 20 million tonnes.