August 2, 2012

 

Kazakhstan to manage huge wheat exports despite low production

 

 

Kazakhstan will manage "large export volumes" of wheat despite a near-halving in production to 12.0 million tonnes, thanks to large inventories.

 

US foreign staff cut to 12.0 million tonnes their forecast for the Kazakh wheat crop this year, a figure one million tonnes below the official USDA forecast and down from 22.7 million-tonne harvest in 2011, the record for post-Soviet times.

 

"Very dry weather, especially in the western part of Kazakhstan is expected to strongly impact yields," the USDA's bureau in Astana, the Kazakh capital, said.

 

However, wheat exports for 2012-13 were pegged at 7.5 million tonnes, a figure which, while well below last season's 11.0 million tonnes, is 500,000 tonnes higher than the USDA has counted on.

 

It is also above the 7.2 million tonnes at which the International Grains Council last week estimated Kazakh wheat shipments.

 

The export forecast reflects an estimate of stocks being swollen to 25.6 million tonnes by last year's harvest, with the country using only some eight million tonnes of the grain itself and, as a land-locked country, seeing limits to its ability to expand exports.

 

"Very large carry-in stocks are expected to allow for a continuation of large scale wheat and flour exports in 2012-13," the bureau said.

 

"In addition to large stocks, smaller export volumes and less competition from Russia due to a worse crop there should also create strong demand for Kazakh grain."

 

Kazakh exports through Russian and Ukrainian ports on the Black Sea in 2012-13 were limited by these countries' own strong export programmes -- of wheat for Russia and corn for Ukraine.

 

The forecast interrupted a series of downbeat reports on dryness-hit wheat crops in the former Soviet Union, notably in Russia, where concerns for a weak harvest have revived concerns of Moscow introducing export curbs, as it did amid the, more extreme, drought two years ago.

 

"Last week saw privates peg output at 42.5 million tonnes, just one million tonnes above levels seen back in 2010," FCStone commodity risk manager Jaime Nolan Miralles said.

 

"The International Grains Council has rowed in with a figure of 45 million tonnes, which in and of itself also makes for very uncomfortable reading."

 

At Benson Quinn Commodities, Brian Henry said, "There is talk now that Russian production is expected to be in the neighbourhood of 42 million-43 million tonnes, which will likely limit exports to below 10 million tonnes."

 

"Weather forecasts for this region do not offer much relief," he added.

 

Also on Tuesday (July 31), Nikolai Fyodorov, Russian agriculture minister, narrowed to 80 million tonnes, from 80 million-85 million tonnes the farm ministry forecast for Russia's production of grains overall, while a report from news agency Interfax warned that this estimate could yet be lowered further, to 75 million tonnes if drought persists.

 

Russia was initially expected to achieve a wheat harvest in line with last year's 56.2 million tonnes. The expectation of firm Kazakh wheat exports comes amid continuing caution over quality, given a shortfall in suitable storage facilities.

 

The country estimates its storage at about 23 million tonnes, including nine million tonnes of on-farm silos. However, "despite this large capacity, a significant portion of grain storage facilities were constructed 50 years ago or more".