October 6, 2008

Russian grain production forecast rose 

Total grain production forecast for Russia was raised by 3.7 million tonnes to 96.9 million tonnes.

The US Department of Agriculture's (USDA) Foreign Agricultural Service (FAS) recently said the total grain production forecast for Russia was raised by 3.7 million tonnes to 96.9 million tonnes, based on harvest progress.

The wheat production forecast is 58.5 million tonnes, a 2.3-million tonne increase from the September forecast. Barley production forecast was increased by 2.3 million tonnes to 20.5 million tonnes. Corn production forecast remains at 5.6 million tonnes. The FAS forecast grain exports at 17.5 million tonnes, an increase of 2.6 million tonnes from the September forecast.

Russia's Agricultural Minister Aleksey Gordeev declared that the possible grain production increase from 95 million tonnes to 97 million tonnes will depend on the crop harvested in Siberia. Agricultural Minister Gordeev also increased his previous grain exports forecast to 20-25 million tonnes.

The FAS said this forecast may demonstrate that Russia is not going to introduce any restrictions on grain exports. It was also noted that the FAS grain export forecast is still lower than the Russian MinAg's forecast because in MY 2008, exporters' competition in the international wheat and barley markets will be high.

Additionally, it said Russia's exports will be hampered by logistics, including shortage of railway cars, elevators and port terminals.

Prices of milling quality wheat have stabilised, although at much lower levels than half a year ago. Prices of feed quality wheat and barley continue to decrease.

The FAS said the Russian government continues grain procurement interventions and started purchasing feed wheat. However, volumes of purchases are still small and cannot stabilise feed grain prices. The FAS increased carry-over stocks of grain to be 8.3 million tonnes by the end of MY 2008. Industrial use and losses of grain may exceed 5.3 million tonnes in MY 2008.