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Where the margin is 2020

Where the margin is 2020
February 6-7, 2020, Moscow

IKAR in Mass and Industry Media


No let-up for Russian wheat exports

producer.com, 21.05.19


One of the problems in trying to determine the extent of Russian wheat exports is that the margin of error in the country’s official statistics tends to be quite large. This wheat field was being harvested last September in Russia’s Krasnoyarsk region.

REUTERS/Ilya Naymushin photo

The country was expected to run out of wheat for export last year, but it didn’t happen; now another bumper crop looms.

Russian wheat exports finally appear to be waning many months after analysts thought the country would be relinquishing its grip on the market.

Grain industry gurus had forecast that Russia would run out of wheat by the end of 2018. Some said the government would take steps to curb exports once shipments reached 25 million tonnes.

Russia’s exit was supposed to breathe life into wheat markets, mopping up supplies from other exporters like the United States.

That didn’t happen.

The U.S. Department of Agriculture forecasts 37 million tonnes of Russian wheat exports in 2018-19.

That would be the second largest export program on record next to the previous year’s 41.4 million tonnes.

Unfortunately for Canadian growers, it looks like a bumper Black Sea crop is on the way in 2019-20.

Cam Dahl, president of Cereals Canada, acknowledges he was one of those who thought Russia would run out of wheat long before it did.

“It goes to show the value of good statistics and the value of the statistics that we get out of Russia,” he said.

Dahl isn’t suggesting Russia was deliberately misleading the market with its lowball production estimates but he said the margin of error in Russia’s official statistics tends to be large.

Kim Anderson, professor of agricultural economics at Oklahoma State University, was less diplomatic in his assessment of the situation.

“They were sandbagging it,” he said.

It reminds him of the previous year when Russia’s first estimate was for a 65 million tonne crop. The number eventually blossomed to 85 million tonnes.

Anderson has been observing Russia’s wheat industry since 1982.

“They are brilliant, brilliant marketers. They know how to manipulate the marketing system,” he said.

This year was no exception with Russia seemingly ratcheting up its exportable wheat supplies every month.

“They’d find 50 million bushels here and 50 million bushels there. They just kept coming up with more wheat,” said Anderson.

It appears that Russia is finally running out of wheat.

Exports in April fell to 1.9 million tonnes, the lowest monthly total since July 2017. That is due to the combination of poor demand, a strong Russian ruble and dwindling supplies, according to SovEcon.

UkrAgroConsult reports that Russia’s wheat stocks were 13.9 million tonnes as of April 1, one-third below the same time last year.

But it appears there will be plenty of wheat to replenish supplies based on early predictions of the 2019 crop.

Russian Agriculture Minister Dmitry Patrushev is forecasting a harvest of 75 to 78 million tonnes.

Other organizations, such as the International Grains Council, Russia’s Institute for Agricultural Market Studies and Rusagrotrans, are right around 80 million tonnes.

SovEcon is at the high end of the range with a forecast of 83.4 million tonnes, which would be the second biggest crop on record next to the 2017-18 crop of 85 million tonnes.

Winter wheat plantings are a record high 38.8 million acres. SovEcon says winter wheat conditions are slightly better than average in the south and “almost ideal” in the central region. The exception is the Volga Valley, which is worse than average.

Spring wheat planting is proceeding at a record pace that is 3.5 times more than last year.

SovEcon forecasts 28.1 million tonnes of Ukrainian wheat, which would be a record for post-Soviet times.

Dahl said Black Sea wheat production isn’t the only concern. The U.S. Department of Agriculture forecasts a bearish 29.58 million tonnes of U.S. wheat carryout and the 2019-20 winter wheat crop is in very good shape.

“Even if we did see a pullback in Russian exports or exhaustion of supply, that doesn’t necessarily mean we would see a significant uptick in market prices,” he said.

https://producer.com/2019/05/no-let-up-for-russian-wheat-exports



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