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Russia's SovEcon cuts 2019 wheat crop forecast; new crop prices jump

Reuters, 03.06.19

MOSCOW, June 3 (Reuters) - SovEcon said on Monday it had downgraded its forecast for Russia's 2019 wheat crop due to dry weather in May and could reduce it further if June proves to be hot and dry too.

Black Sea prices for the Russian new wheat crop with 12.5% protein content and July delivery were at $195 per tonne on a free on board (FOB) basis at the end of last week, up $8 from a week earlier, SovEcon, one of the a leading agriculture consultancies in Moscow, said in a note.

IKAR, another Moscow-based consultancy, quoted FOB new crop at $197 per tonne at the end of last week. Russia usually starts wheat harvesting in late June or early July.

"The weather in the Black Sea is becoming not so favourable for the new crop," SovEcon said.

It said it had downgraded its forecast for Russia's 2019 grain crop to 127.2 million tonnes from the previously expected 129.1 million tonnes due to lack of precipitation in May in some of Volga regions and part of the southern regions.

Its estimate of wheat crop was cut to 82.6 million tonnes from 83.4 million, it added. Russia's agriculture ministry currently sees Russia's 2019 grain crop at 118 million tonnes, including 75 million tonnes of wheat.

"The next two weeks and potentially whole June are forecasted to be significantly drier than normal, which may lead to further downgrades of crop estimates," SovEcon added.

By June 3, farmers had sown spring grains on 94% of the planned area, or 27.9 million hectares, compared with 25.8 million hectares a year ago, the agriculture ministry said.

SovEcon also downgraded its estimate of Russia's grain exports in the new 2019/20 marketing year, which starts on July 1, by 700,000 tonnes to 48.7 million tonnes. The wheat export forecast was cut by 500,000 tonnes to 37.7 million tonnes.

The agriculture ministry sees 2019/20 exports at 45 million tonnes of grain, including 36 million tonnes of wheat.

Russia exported 40.8 million tonnes of grain from the start of the current 2018/19 marketing season on July 1, 2018 to May 30, down 16% from a year earlier, according to SovEcon. That included 33.6 million tonnes of wheat.

Domestic prices for third-class wheat fell 25 roubles to 11,875 roubles ($182) a tonne at the end of last week in the European part of Russia on an ex-works basis, SovEcon said. Ex-works supply does not include delivery costs.

Sunflower seed prices rose by 175 roubles to 18,650 roubles a tonne, SovEcon said. Domestic sunflower oil prices rose by 425 roubles to 42,350 roubles a tonne, while FOB export prices for sunflower oil were flat at $680 a tonne.

IKAR said its white sugar price index for southern Russia was $438 a tonne on May 31, down $11.6 from a week earlier.

($1 = 65.3820 roubles)

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