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April 21, 15:42 Source: APK-Inform Views: 1053

Russian grain crop forecast for 2018

This is the first forecast by APK-Inform Agency for the production of grains and pulses in Russia in 2018. These estimations were made on farmers’ poll over the plans for 2018, the multi-year statistics and the estimations of prices development on the domestic and global markets.

 

Winter crops

The winter crops are very important in terms of annual crop formation as almost the half of the total production is made of winter crops, especially in terms of wheat and rye. Thus, almost all rye in Russia is grown as winter crop. Whereas, winter wheat forms 70% of the general wheat production.

Thus, the conditions of winter crops are the main factors in terms of forecasting the production. According to the Ministry of Agriculture of Russia, the planted areas under winter wheat reached 17.1 mln tonnes, which is 2% lower year-on-year.

Generally, despite the adverse weather conditions in March, the crop condition is not of great concern even if it is a little lower than last year. The Ministry of Agriculture of Russia evaluated in “good to excellent conditions” 92.2%, or 15.8 mln ha of winter wheat (95.6% in 2017).

According to APK-Inform estimations, the preserved areas of winter crops in 2018 can reach 16.7 mln ha, including 14.2 mln ha of wheat (14.9 mln ha in 2017/18 MY). The areas of winter rye are evaluated at the level of 1.15 mln ha (-2.4% y-o-y).

 

Plans of spring crops planting in 2018

 

 

The estimations of the spring crops planting campaign were made by means of farmers’ polls in terms of their plans for the planting campaign in 2018. The poll was conducted in March 2018. In should be noted that before the start of the campaign the majority of agrarians estimated the planted areas under spring wheat and barley (less than 8% of the agrarians did not estimated the crops’ areas).

Thus, based on the responses, in 2018 the areas under wheat can decline – 25% of the interviewed farmers reported such intentions. The main reason for this are unacceptable prices (29% of the responders who plan to reduce the areas). Moreover, nearly 18% of the responders plan to reduce the wheat areas in favour of other crops, mostly sunflower seed and corn.

The record crop and the stocks of wheat in 2017/18 MY stipulated the wheat price decline in comparison with the previous season. This fact together with the increase of the expenditures for the materials and the equipment led to the decrease of the wheat production profitability. The most vulnerable oblasts are those who are far from the export infrastructure, whereas the issue of the price decline comes together with the distribution difficulties. Generally, we estimate that the planted areas under spring wheat in 2018 can reach 12.2 mln ha (-6% y-o-y).

 

 

Many agrarians (20% of the respondents) expressed the desire to increase the barley areas. The main reasons for this were the high prices and demand rate of the product. In the current season, barley became the leader in terms of price rates among feed crops. As of April 2018, the barley prices accelerated the prices of 4-grade milling wheat. The price factor is the main base of the agrarians’ plan concerning the planting campaign, so there is possibility that the farmers will increase the barley areas. But it should be noted that the late start of the planting campaign can become an obstacle for the areas increase. Generally, they are estimated at the level of 7.6 mln ha (+2% year-on-year).

 

 

Speaking about the planting campaign of corn in 2018, many agrarians have not decided on the planted areas (20% of the respondents). The majority of agrarians, who determined over the plan, are going to increase the areas under corn (21%). And the main reasons for these were the competitive prices and the existing demand for the grain. As for today, the corn prices are mostly increasing (due to the high export activity). Corn is a late crop, so agrarians still have the time to decide on the areas. The current situation on the market of corn gives the background for the areas increase, and we estimate them at the level of 3.1 mln ha (+2% y-o-y).

If we speak about other crops, the reduction of the planted areas may occur in terms of buckwheat – to 1.5 mln ha (-11% y-o-y), as the record crop in 2017/18 MY can led to the price decline which in turn will spur the declining interest in growing it. The reduction of the millet areas to its minimum in 2017 led to the decline of the production that led to the price rise. That is why many respondents demonstrated the willing to increase millet areas in 2018, which by our estimated can reach 300 thsd ha (+11.5% y-o-y). However, 25% of the respondents did not determine over the plans for the planting campaign of millet. The planted areas under oats are estimated at the level of the previous year – 2.9 mln ha, and rice – 185 thsd ha.

The respondents did not determine over the peas areas (21% of the companies). In the current season, the areas and the production of peas reached its maximum. Moreover, the export is also very high. But it should be noted that the biggest importers of peas are India (who implement the import tariffs) and Turkey – with whom there are trade tensions. For now, in terms of high level of uncertainty, we estimate the planted areas in Russia at the level of last year i.g. 1.3 mln ha, as there is possibility of both increase and decrease of the areas.

 

Forecast

Generally, the winter crops condition is not of great concern, even if it is little lower than the last year one. Speaking of spring crops, it should be noted that there is a possibility to miss the optimum window for planting works, which in turn can affect the yield.

According to the Ministry of Agriculture of the Russian Federation, by the end of the first ten-day period of April the planting campaign of spring crops was 418.3 thsd ha completed (908.7 thsd ha in 2017), including spring wheat – 13.7 thsd ha (46.3 thsd ha in 2017), spring barley – 135.8 thsd ha (475.1 thsd ha in 2017).

For now the yield is not going to decline significantly and, concerning the historical statistics, the average yield can reach 2.88 t/ha (2.99 t/ha in 2017/18 MY).

In 2018/19 MY, the production of grains and pulses may not reach the record level of 2017/18 MY, but still may become the second largest. According to APK-Inform estimations, the production of grains in Russia in 2018/19 MY is forecasted at the level of 128.3 mln tonnes (-5% y-o-y). Herewith, the production of wheat – 77-78 mln tonnes, barley – 20.8 mln tonnes (the highest level for the last 10 years). The production of corn is forecasted within the range of 13-14 mln tonnes (the same as last season).

 

Forecast of the harvest of grains and pulses in Russia in 2018

Crops

Planted areas, `000 ha

Harvested areas, `000 ha

Yield, c/ha

Production, `000 tonnes

2017

2018*

2017

2018*

2017

2018*

2017

2018*

TOTAL GRAINS

47 673

46 585

46 301

44 620

            29,2  

            28,8  

135 393

128 298

Wheat

27 891

26 379

27 524

25 416

            31,2  

            30,7  

85 863

78 121

 - winter

14 925

14 192

14 838

13 908

           41,7  

           41,2  

61 850

57 237

 - spring

12 966

12 188

12 668

11 508

           19,0  

           18,1  

24 013

20 884

Barley

8 004

8 169

7 840

7 970

            26,3  

            26,1  

20 599

20 801

 - winter

515

569

511

559

           41,8  

           42,4  

2 140

2 369

 - spring

7 490

7 600

7 328

7 411

           25,2  

           24,9  

18 459

18 432

Rye

1 184

1 154

1 176

1 117

            21,7  

            21,9  

2 547

2 446

Oats

2 886

2 914

2 770

2 812

            19,7  

            19,6  

5 451

5 517

Corn for grain

3 027

3 087

2 702

2 739

            49,0  

            49,1  

13 236

13 434

Millet

266

296

235

287

            13,5  

            14,1  

317

406

Buckwheat

1 691

1 505

1 496

1 380

            10,2  

            10,8  

1 524

1 485

Rice

187

185

186

182

            53,1  

            54,3  

987

988

Peas

1 328,0

1 325,0

1 263

1 267

            26,0  

            25,1  

3 286

3 180

* APK-Inform forecast

Source: Federal State Statistics Service (Rosstat)

 

For now the planting campaign in Russia has only began and our forecast is quite doable. But you should remember that the weather conditions can affect some adjustments. So, in the beginning of the last season no one could imagine the record crop. Thus, the development of the situation remains to be seen.

 

Julia Krekhovich, Analyst at APK-Inform Agency

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