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Russia harvest forecasts cut as drought hits crop in east

20 августа 2012 года

MOSCOW, Aug 20 (Reuters) - Two leading Russian agricultural analysts cut their forecasts for Russia's grain harvest on Monday after harvest data from two drought-stricken eastern growing regions reduced the outlook for the overall crop.

SovEcon narrowed their grain forecast to 71-72.5 million tonnes from a previous 70-74 million tonnes after the start of harvesting campaign in Urals and Siberia regions showed weak crop prospects. It has also cut wheat harvest forecast to 39-41 million tonnes from earlier 40.5-42.5 million tonnes.

The Institute for Agricultural Market Studies (IKAR) has cut its 2012 grain crop forecast to 73 million tonnes from a previously expected 75.4 million tonnes, its chief executive, Dmitry Rylko, said. It has not yet estimated wheat harvest.

"I see the possibility of further downgrading," Rylko said.

The government's official grain harvest forecast is 75-80 million tonnes, of which 45 million tonnes could be wheat. The government has put this season's exportable surplus at 10-12 million tonnes, a level seen by traders as an informal cap on exports.

The government has tried to reassure markets there will be no repeat of August 2010, when Russia's government shocked markets with a snap decision to ban grain exports when the scale of losses from major drought became clear.

The government has indicated that protective tariffs could be an option, though only after the end of the calendar year.

But traders widely expect limits to be imposed in some form, perhaps as early as November, after heavy exports in the early months of the season showed Russia could hit the 10-12 million tonne mark sooner than Jan. 1.

ROUBLE TO RESTRAIN EXPORT

Analysts say export restrictions could prove unnecessary if domestic prices rise, making delivery within Russia more profitable than export.

That may happen soon, SovEcon said. A strong rouble may dampen demand for Russian export grain and tip prices further off historic highs in the coming weeks despite signs of tightening supply.

"Many exporters are talking about price decrease in ports in the coming weeks because of the rouble's rise and the global wheat market correction," SovEcon agricultural analysts said in a note.

Grain is sold within Russia at rouble denominated prices, making it less competitive on export markets when the Russian currency rises. The rouble, which trades in line with oil prices, the country's key economic driver, recovered from crude's recent weakness in mid-July.

U.S. wheat fell marginally on Monday morning as traders locked in profits following three straight sessions of gains amid concerns over potential shortfalls in global supplies of the grain, particularly from the Black Sea region. The contract was up 0.11 percent by 0831 GMT.

The price of export wheat was unchanged last week at $310-315 per tonne, free on board (FOB) in the Black Sea port of Novorossiisk, it added.

Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), estimated last week's FOB level for 12.5-percent wheat at $310 per tonne, down from $312 per tonne, while the price in shallow water terminals remained unchanged at $272 per tonne.

Analysts have forecast August exports in a 2.5-3.5 million tonne range, up from 2.1 million tonnes in July. Russia exported 1.26 million tonnes of grain during the first half of August, including 1.05 million tonnes of wheat, Russia's Prozerno analysts said last week.

The world's top wheat importer Egypt's state wheat buying agency, the General Authority for Supply Commodities (GASC), bought 180,000 tonnes of Russian wheat during in two tenders on August 11 and 14. Analysts pegged FOB prices at historic highs after the tenders.

The average Russian price of fourth-grade milling wheat in deep-water ports last week was stable at 9,600-9,800 roubles per tonne on a carriage-paid-to (CPT) basis, while some exporters decreased it to 9,500 roubles per tonne, according to SovEcon.

Russia's average domestic EXW (ex-silo) price for third-grade milling wheat declined by 25 roubles to 8,300 roubles ($260) per tonne, while the fourth-grade price was unchanged at 8,275 roubles per tonne, SovEcon added.

Weak harvest prospects in Urals and Siberia continued to support prices in those regions and pushed prices to overheated levels, SovEcon added. Wheat price there rose by 300-400 roubles per tonne last week.

On oilseeds, crude sunoil prices have slightly increased to 42,500 roubles to 41,500 roubles and rose slightly in dollar terms to $1,332 per tonne from $1,318. Rapeseed prices in CBS have further strengthened to 15,000 roubles per tonne from 14,500 roubles.

Sugar prices in southern Russia decreased to 22,000 roubles per tonne from 24,300 roubles, which in dollars was a fall to $690 from $772, IKAR added.

($1 = 32.0862 Russian roubles)

Source: Reuters  |  #grain #cereal   |  Comments: 0   Views: 69

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