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IKAR in Mass Media

Russia wheat yields dip, FAO warns on 2011

10 сентября 2010 года

MOSCOW, Aug 4 (Reuters) - Grain harvesters moved into Russia's rain-starved regions as the UN's food agency cut its 2010 global wheat forecast and warned world supplies may shrink next year if Russia's worst drought in over 100 years continues.

So far in the current campaign Russia has reaped just over 35 million tonnes of grain, the agriculture ministry said on Wednesday, fractionally down on a year ago, but the bulk of this was from regions largely unaffected by drought.

Average yields fell to 2.22 tonnes per hectare from 2.78 tonnes a year ago, which does not bode well for the output from the drought-affected regions.

The campaign was proceeding in the regions along the Volga River, north-western Russia and was starting in the Urals, areas where states of emergency due to the drought have been declared. The drought emergency has spread from 23 regions last month to 27 regions as of Tuesday.

U.S. wheat futures rebounded on Wednesday, surging to a fresh 22-month high as worries about output in the drought-ravaged Black Sea region resurfaced after the previous session's dip.

Concern that Russia and neighbour Ukraine might move to curb grain exports helped fuel prices.

The UN's Food and Agriculture Organisation sliced 25 million tonnes from its previous world wheat forecast released in June before the drought took hold in Russia, which exported just over 18 million tonnes of wheat last year.

Expressing worries voiced by some in the grain markets about planting before the Russian frosts, the FAO said: "Should the drought in the Russian Federation continue, it could pose problems for winter plantings in that country with potentially serious implications for world wheat supplies in 2011/12."

Grain analysts the Institute for Agricultural Market Studies (IKAR) cut its own estimate for the Russian grain crop to 70 million tonnes and said the drought could hit the key winter sowing period.

"If there are not heavy rains in the next two weeks, the winter sowing is a big question," IKAR head Dmitry Rylko told Reuters Insider television, adding that some regions worst hit by the drought were approaching the optimal period for winter wheat planting.

World wheat prices have jumped by more than 50 percent since June and are likely to rise further due expectations of tighter supplies, triggering concerns about a repeat of the food crisis of 2007/08, the Rome-based FAO said.

However, such fears were not justified at present because world stocks, especially held by major exporters, were strong enough to cover expected production shortfalls after two consecutive years of record crops, the agency said.

"External factors, including the macro economic environment and developments in other food markets, which were major drivers behind the surge in international prices in 2007/08, are not posing a threat so far," the FAO said.

UKRAINE CROP SHRINKS

In neighbouring Ukraine, also hit by weather problems, the total grain crop this year is expected to be more than 40 million tonnes, down from 46 million last year, First Deputy Prime Minister Andriy Klyuev said on Wednesday.

"Despite drought, Ukraine has had quite a good harvest of early grains," he said.

Ukraine does not need at the moment to limit grain exports, Viktor Slauta, Deputy Prime Minister in charge of agriculture said on Wednesday, echoing remarks from Russia this week.

"We have no grounds for limiting exports of grain ... I believe that Ukraine will have bread, Ukraine will have fodder grain and it will maintain its export potential," he was quoted by Interfax news agency as saying.

The head of the Russian unit of commodity trader Glencore told Reuters on Tuesday that Russia's forecast of a 2010 grain crop of up to 75 million tonnes was too optimistic and that it expected a 65 million tonne crop.

It said it wanted Russia to impose an outright ban on grain exports from September, to prevent defaults by exporters on signed contracts.

LOST MARKET SHARE

Key exporters such as Australia and the United States are seen by analysts pouncing on market share as drought-stricken countries reap smaller crops, a dent to Russia's strategy of heavily investing in its post-Soviet grain infrastructure.

Traders said some Black Sea shipments to Asia had already been held up, although Russia figured prominently on Wednesday in a wheat tender from Egypt, the world's biggest importer of the food grain.

A Russian grain market source told Reuters that the crop situation may prove to be even worse than currently expected. "65 million is an intermediate figure," the source said, adding that farmers will hide as much grain as they can expecting to sell it for cash on a rising market.

"Therefore the official grain crop figure may prove to be even lower," the source added.

The source expects defaults on grain shipments from Russia in September as farmers are reluctant to sell grain to exporters.

Source: Reuters  |  #grain   |  Comments: 0   Views: 37

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