August 23, 2011


Russia joins countries with wheat quality fears



Russia has joined other countries with worries over wheat quality, with the early produce being below expectations.


SovEcon, the influential analysis group, warned that "market players in many producing regions" of Russia were reporting that this year's wheat harvest had, on quality, fallen short of expectations.


"The supply of feed wheat is at a high level, while that of milling wheat is limited," the Moscow-based group said.


Andrey Sizov, the SovEcon managing director, said that there was a "lack of high quality wheat in the market", which was being reflected in a lack of offers for milling wheat in Russia's southern and black earth regions.


Prices of third-grade milling wheat had risen by 6.2% to RUB5,540 (US$191.49) a tonne over the past week in European Russia, with fourth-grade, the type exported, up 4.4% to RUB5,350 (US$184.93) a tonne, on SovEcon data.


"Right now [the shortage of milling wheat] looks like it is a problem. It looks like the premium of high quality wheat may be higher than usual," Sizov said.


He added that milling wheat supplies could "improve" as the harvest hits Siberia, which normally produces high levels of milling wheat.

The comments come ahead of a conference on Monday (Aug 22) from Russian officials monitoring grain quality, who had been expecting a high quality crop.


"According to the government agency responsible for grain quality evaluation in Russia, this year the quality is expected to be better than average, with the share of food wheat at 75%," USDA officials noted last week.


And it follows concerns in Ukraine, where as little as 40% of wheat may be of milling grade, according to private analysts, and Germany, the EU's second-ranked producer of the grain, where wet weather has, for a second year, compromised quality.


"In Germany, harvests were reined in by strong rains this weekend," Agritel, the Paris-based consultancy, said Monday. "Operators consider that 60% of area is yet to harvest in the key north region of Germany. As a matter of fact, quality should be downgraded again."


In the US, reports have agreed on threats to spring wheat harvest delays, and potentially smaller area than had been thought, if conflicting on crop quality.


The UK grain arm of a major global commodities house on Friday noted the US spring wheat crop was suffering "poor early yields, widespread disease and rain constantly battering what is left out in the fields".


However, the Russian crop outcome appears a further fillip to the domestic poultry industry, also enjoying substantial government support as the country seeks to turn self-sufficient in chicken.


"Feed supply should be available at appropriate prices for the Russian poultry industry over the next year," USDA attaches in Moscow said, forecasting that the country's output of broiler meat will rise 9.1% to a record 2.75 million tonnes in 2012.

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