Wheat exports from Russia, Ukraine and Kazakhstan will decline 3 percent in the 2014/15 marketing year as a smaller sown area and lack of ready financing was partly offset by favourable weather, a Reuters poll showed. The three major global wheat exporters via the Black Sea, supplying customers mainly in North Africa and the Middle East, are forecast to export 35 million tonnes during 2014/15, starting July 1, the poll of 15 traders and analysts showed.
A small rise in exports from Russia was not expected to be enough to offset a fall in exports from Ukraine and Kazakhstan. Analysts broadly assumed the three countries will see a second consecutive year of large crops, despite earlier concerns of political risks to grain supply and trade due to unrest in Ukraine and related tensions with Russia.
Their combined 2014 crop is expected to remain flat, year-on-year, at 88 million tonnes of wheat based on improvements in the outlook after recent rains in some key growing regions. "Recent rain has improved the condition of crops in Russia," said Vladimir Petrichenko, the head of the ProZerno consultancy. "Conditions in Russia's south are wonderful," said a Moscow-based trader. Russian wheat harvesting is to start on June 25, slightly late because of rain, he added.
The crops from the three producers, which account for about a quarter of the world's wheat exports in good harvest years, will contribute to an expected global wheat surplus, adding to pressure on international prices. "It's going to be a huge crop," said a trader specialising in Russian wheat. "Exports will not be lower than last year." Global domestic use of wheat in 2014/15 is projected at 699.1 million tonnes, while production is expected to be at 701.6 million tonnes, according to the latest US Department of Agriculture (USDA) report.
The poll showed Russia's 2014/15 wheat export forecast was 19 million tonnes with the crop expected to rise 2 percent to 53 million tonnes. In the current year USDA expects Russia's wheat exports at 18.5 million tonnes. The poll suggests that Ukraine's 2014/15 exports will slip to 9 million tonnes compared to the USDA's 9.5 million tonnes estimate for this year, while the 2014 crop is expected at 21 million tonnes, down 6 percent year-on-year. Kazakhstan, central Asia's largest grain producer, is expected to export 7 million tonnes of wheat, including flour, down 12.5 percent year-on-year, with crop at 14.5 million tonnes, up 4 percent.
QUALITY ISSUES Among the risks for expectations of a good harvest, the US MDA Weather Services noted possible dryness in some areas of Russia's Volga Valley, while some traders were concerned about the quality of the new crop. "The big question mark is what kind of quality we have," said the trader specialising in Russian wheat. "If it is bad quality with low protein or high bug damage then this huge crop will be impossible to export."
The harvest in Ukraine may be not less than last year, another trader said. "The only worrying thing is that the quality may be slightly worse." Ukraine's harvest quality could be at risk unless the government guarantees supplies of about 1.5 billion cubic metres of gas to power heating silos to dry grain and oilseeds, the Agrarian Confederation grain lobby said. This follows Russia's Gazprom halting supplies to Ukraine over the failure to settle a price dispute. Farmers in Ukraine had managed to sow 96 percent of the planned area for spring grains and pulses, despite a jump in fuel prices, its Agriculture ministry said. Some farmers in Ukraine and Russia have been forced to use cheaper seeds or cut the amount of fertiliser they can purchase while others have struggled to get loans to replace old equipment this year. Russian farmers had sown larger area for spring wheat, but previously there was a decline in winter wheat sowed area. Kazakhstan, which sows mainly spring grains, has said the area planned for spring wheat was 300,000 hectares smaller this year than last year after some farmers switched to sunflowers.
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