Wheat exports from Russia, Ukraine and Kazakhstan will fall 10.1 percent in the upcoming 2016/17 marketing year due to a smaller sowing area and dry autumn in Ukraine, a Reuters poll showed. The three global wheat exporters via the Black Sea, supplying customers mainly in North Africa and the Middle East, are forecast to export 42.7 million tonnes in the 2016/17 marketing year that starts on July 1, the poll of 14 traders, analysts and officials showed.
The combined crop of Russia, Ukraine and Kazakhstan is expected to decline by 4.8 percent year-on-year to 97.2 million tonnes of wheat in 2016. The poll gave a 2016/17 wheat export forecast for Russia of 25.0 million tonnes, up 2 percent year-on-year, with the crop expected to rise 1.7 percent to 62.1 million tonnes.
Analysts widely expect Russia to beat this year's wheat export record. In the current year, the US Department of Agriculture (USDA) sees Russia's wheat exports at 24.5 million tonnes. The poll suggests Ukraine's 2016/17 exports will fall to 10.8 million tonnes from the USDA's 15.5-million-tonne estimate for this year, while the 2016 crop is forecast at 21.8 million tonnes, down 20 percent year-on-year.
Kazakhstan, central Asia's largest grain producer, is expected to export 6.9 million tonnes of wheat, including flour, down 8 percent year-on-year, with a 3-percent fall in the crop to 13.3 million tonnes. Forecasts for Russia and Ukraine exclude about 750,000 tonnes of wheat which, according to an average estimate, the Crimea peninsula is expected to produce this year.
While Crimea is exporting some of its grain, it has found it difficult to supply the bulk of its crop abroad in recent years due to legal risks after Moscow annexed it in 2014. The annexation and a separatist war in eastern Ukraine prompted the West to impose sanctions on Russia, deepening an economic downturn in both countries that has hit their national currencies.
The weaker currencies have made the region's wheat more competitive on dollar-denominated markets and are expected to continue to support exports in the upcoming season, the IKAR consultancy said. The local currencies' volatility is also the main risk for the region, one trader said, adding that some of the estimates for Ukraine's wheat crop might be upgraded later in June on the favourable weather.
In Russia, some forecasts may be downgraded due to rains in the same month, according to SovEcon consultancy. Kazakhstan, still continuing its sowing campaign, is widely expected to remain well placed for supplies to the Central Asia region. In general, the participants of the poll expect the strong competition between the Black Sea region and Europe in the coming months. "We can expect a fierce battle at the start of the season between Russian, the European Union's plus Ukrainian origins," said Gabriel Omnes at French consultancy Strategie Grains.
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