Russian wheat export forecast cut on weak pace and low crop

The export forecast has been lowered again. The reason is the current weak pace and low crop figures for 2019, released by Rosstat in December.

According to customs data, exports of major grains (wheat, corn, barley) in December 2019 amounted to 2.7 MMT (-38% YoY), including wheat – 2.3 MMT (-39%), barley – 159 TMT (-48%), corn – 252 TMT (-25%). Since the beginning of the season (July-December), exports amounted to 24.2 MMT (-16.5% YoY), including wheat – 20.7 MMT (-16%), barley – 2.1 MMT (-31%), corn – 1.3 MMT (+8%).

In November, total exports amounted to 3.4 MMT, wheat – 2.7 MMT, barley – 343 TMT and corn – 362 TMT.

Grain exports continue to down gradually. Domestic prices have increased noteworthily, and the ruble is strengthening.

The main news of January was the AgMin’s proposal to set grain export quota in the second half of the season. The Ministry of Agriculture is developing a draft decree to set a quota for the export of key grains (wheat, barley, corn, oats, rye) in January 2020-June 2020 with a volume of 20 MMT. The quota may become permanent for the second half of the season and could be applied in later years as well.

For the current season, a quota in this volume will not have a noticeable impact on the market, since it is very likely that it will not be filled, we estimate key grain exports to be below 17 MMT in the second half of the season.

However, it is an unpleasant precedent – the size of the quota may be lower than the export potential in the future. Let us remind that in addition to the quota, Russia has a floating export tax on wheat, which is now equal to 0, but can be increased quickly if necessary.

The export forecast has been lowered again. The reason is the current weak pace and low crop figures for 2019, released by Rosstat in December.

The forecast for wheat exports was reduced by 0.9 MMT to 32.2 MMT (USDA estimate – 34.0 MMT), barley – by 0.3 MMT to 4.2 MMT (5.6 MMT), corn – by 0.1 MMT to 3.2 MMT (5.7 MMT).

The estimate of total grains exports, pulses and processed products was reduced from 42.8 MMT to 41.5 MMT.

The situation on the wheat market in the second half of the season is expected to be very tense due to low stocks. Market stocks at the end of the season are estimated at 5.3 MMT, and the stocks/consumption ratio is at a record low for the last years of 7% (7.2% a year earlier). Stocks in the corn and barley markets are expected to be at historically high levels.

Follow the Black Sea grain market

Get your free trial of The Sizov Report — an analytical service covering agricultural markets of Russia, Ukraine and Kazakhstan

Try for free

More Articles for You

Russian wheat is cheaper on record-high on-farm stocks. Will this convert into aggressive exports in 21/22?

Russian wheat tumbled on higher supply from farmers amid approaching new crop and record-high on-farm stocks.

Weather helps new Russian wheat crop, SovEcon upped the forecast

SovEcon upped the Russian wheat crop forecast on favorable weather

Russia seeds spring wheat at the highest pace in five years

Russian farmers have seeded 12.8 mln ha of spring wheat compared to USDA’s estimate of 12 mln ha

Weather models predict different precipitation for key Russian spring wheat regions

The weather has been unfriendly for Russian spring wheat so far but things could change this week.

Why Russian wheat is not competitive today

Egyptian GASC is holding a new wheat tender today for 8-22 August shipment. It looks like Romania and perhaps Ukraine could be the winners today. Why Russian traders are cautious sellers?

3 reasons why Russian farmers still like wheat

As of May 13, Russian farmers have seeded 4.1 mln ha of spring wheat. The seeding is catching up with the average pace on warmer weather after late spring which delayed the planting campaign in many regions. Despite the export tax we expect the country to increase the spring wheat area. Here’s why.