Since the second half of May we have been anxiously watching the worsening weather conditions for the formation of new crop. We began to gradually decrease the forecasts for it a month and a half ago, giving notice of the probability of their further review in the event that the unfavorable weather conditions persist in June.
We can actually see that the past period of approximately a month and a half was quite unfavorable for the new crop due to the dry and hot weather that concurred with the grain-filling period for many regions. The starting yield in the South which is the largest grain-producing region in Russia has turned out to be extremely low compared to our expectations. (It would fair to say that they might have been a bit inflated in some cases).
We are sharply decreasing the forecast for the new crop of wheat, from 82.2 mln t to 76.6 mln t. First of all, this is associated with the average, instead of the expected good, crop on the South (the Southern Federal District and the North Caucasian Federal District). We expect the region to harvest 31.6 mln t vs. 30.5 mln t in the previous year and 34.3 mln t in 2017. The estimates have also been lowered for other regions.
We would like to point out that the forecast may be eventually lowered even more because it is highly likely that it does not fully reflect the damage caused to the winter wheat in the Center and the Volga Valley by the recent weather.
The rains that are expected in the nearest time may have a favorable impact on some part of the spring crops but it will probably be too late for the winter crops.
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