Russia faces big grain crop, stocks in 2017

Russia is expected to have another big grain crop in 2017, adding to a record crop this year and increasing pressure on prices, SovEcon, a leading agriculture consultancy, told a conference on Wednesday. In the first major industry estimate for the 2017 grain crop SovEcon said Russia's harvest next year could amount to 112.5 million tonnes, the second largest since the collapse of the Soviet Union after this year's record 119.5 million tonnes.
"If this forecast materialises, it would be the second-largest crop in post-Soviet history," SovEcon told the conference. "Everything depends on what kind of winter we will have." Currently the consultancy expects the coming winter to be favourable for winter grains and only 2.5 percent of sowings to be lost afterwards.
The harvesting in Russia, expected to become the world's largest wheat exporter in 2016/17 marketing year which runs until June 30, is almost completed but officials are yet to announce the size of the 2016 crop after drying and cleaning. This year's record crop will leave Russia with 38 million tonnes of grain available for export in 2016/17 and very high stocks of 19.6 million tonnes by June 30, 2017, SovEcon said. For wheat, that will mean a crop of 72.5 million tonnes with 28 million tonnes of exports in 2016/17 and 12.4 million tonnes of stocks by June 30, 2017, it added.
"For now, these numbers are of a virtual nature but the market will already feel the threat in the spring and, if the (2017) crop prospects are good, that would have a double effect," said SovEcon head Andrey Sizov Sr. Russia has usually been active in the first half of previous marketing seasons as its farmers sell their stock to get cash ahead of sowing winter grains and compensate for low storage capacities. The devaluation of the rouble, however, has boosted farmers' rouble revenue in the last two years and storage capacity has increased. "Russia will remain an active exporter in the second half of the season," said Andrey Sizov Jr., SovEcon's managing director.
For now its grain exports are running slower than many analysts had originally forecast, partially due to autumn storms in the Black Sea and a relatively stable rouble. The country exported 15.8 million tonnes of grain, including 12.5 million tonnes of wheat, between July 1 and November 23, down 0.8 percent from the same period a year ago. Grain stocks were up 8 percent at 48 million tonnes as of November 1.