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russia34MOSCOW: Russia, one of the world's biggest wheat exporters, is likely to harvest around 84 million tonnes of grain next year, up from 70.5 million this year but below the 2011 level, Sovecon agriculture analysts said on Friday.


The forecast is based on a reduced estimate for the winter sown area and on signs that conditions for the winter grain plantings are worse than historical averages in the main southern regions of Russia.


"Such a harvest can create a rather tense situation (for domestic demand)," Andrei Sizov Sr., CEO and president of SovEcon thinktank, told a conference of grain traders, growers and analysts.


Russia, hit by hot and dry weather, is expected to harvest 70.5 m illion tonnes of grain after drying and cleaning this year, including 37.5 million tonnes of wheat, he said.


In 2011 the country, historically the world's third-biggest wheat exporter, harvested 94 million tonnes of grain, including 56 million tonnes of wheat.


The percentage of plantings deemed to be in a poor state in Russia's South and in the North Caucasus region is greater than the average seen in 2007-2011, but can improve in December, the country's top weather forecaster said on Friday.


The Agriculture Ministry cut the outlook for the winter sown area to 15.9 million hectares last week, from the previously expected 16.82 million hectares. Last year this area was seen at around 16.1 million hectares.


Together with spring grain, Russia is likely to sow 44-45 million hectares for its 2013 harvest, flat year-on-year, Sizov said.


"This means that weather factors will determine the harvest," he said. The level of soil moisture is currently lower in the southern region than it was a year ago, while the level in the Central region is good, according to his data.




Massive exports to take advantage of rising global prices, together with a weak harvest, will bring carryover stocks to a critically low level by the end of the 2012/13 season, depleting the government stocks first and foremost, Sizov added.


He raised the 2012/13 grain export forecast to 14 million tonnes, including 9.5 million tonnes of wheat, from the previously expected 10.5 million tonnes and 7.5 million tonnes respectively.


Russia aims to sell up to 1.25 million tonnes of grain from its 5-million-tonne stocks into the domestic market this year to try to ease prices that are currently at a record high. Sales started in October have not had much effect so far. Officials plan to restart active sales in February.


"The government will not have resources to regulate the market during the next season. All these resources will be used this year," Sizov said. "Taking into account Russia's engagement in exports, these low stocks may result in a significant pressure on the domestic market."


He expected carryover stocks at 8.5 million tonnes of grain as of July 1, 2013, including 1.0 million tonnes of the government's intervention stocks, down from last year's which were pegged officially at 19.4 million tonnes.


Wheat carryover stocks will reach a critically low level of 5.5 million tonnes in the next season, he said.


Major traders expect to export about 600,000 tonnes of Russian wheat in December, Sizov said. Shipping in January is expected to reach 400,000 tonnes of wheat, said a large trader, who asked not to be named.


"There are no export deals with Russian wheat planned for February," the trader told Reuters on the sidelines of the conference. "Taking into account tight (supply and demand) balance in the southern region, all its stocks will be used to cover the region's demand till the end of the season (at end-June)."


Sizov expects small and mid-sized traders to continue shipping to Armenia and Georgia in the coming months.


The country has already exported 11.38 million tonnes of grain between July 1 and Nov. 21.


SovEcon also raised its 2012/13 import forecast to 2.2 million tonnes of grain, including 1.5 million tonnes of wheat, up from the previously expected 1.7 million tonnes and 0.9 million tonnes respectively.


Copyright Reuters, 2012

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