SovEcon cuts further Russia wheat harvest forecast

August 20th, 2012

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Category: Grains

Weather affecting agriculture(AgriMoney) – Hopes dimmed further for Russia’s drought-hit wheat harvest, with SovEcon putting it potentially at its lowest in nine years, and rival Ikar lowering estimates for overall grains production.

SovEcon, the Moscow-based consultancy, cut to 39m-41m tonnes, from 40.5m-42.5m tonnes, its forecast for the Russian wheat harvest, following damage to yields from dry weather.

Besides putting the harvest on track for a drop of at least 27% year on year, the downgrade also increases the scope for underperforming the 2010 harvest, hurt by the worst drought on record, which fuelled a surge in grain prices.

That was the worst result since the 34.1m tonnes achieved in 2003-04.

Russia has, over the last decade, become an increasingly important supplier of large quantities of competitively priced wheat, and indeed has seen a bumper start to exports for 2012-13, a pace many observers attribute in part to fears that the weak harvest will prompt the government to impose curbs on shipments.

‘Could all be gone’

Indeed, Russian wheat exports, which topped 21m tonnes in 2011-12, may end up at only 6m tonnes this season despite the strong early pace, Paris-based Strategie Grains said last week.

“On that basis, it could all be gone by the end of next month,” grain traders at a major European commodities house, with considerable Russian interests, said.

“There has been more talk about how long the Russians will continue to export.

“Regardless of what export tariffs or other measures may, or may not, be imposed, it looks as if Russian exports will run dry before we are far into the autumn.”

Harvest results

SovEcon’s downgrade follows official data as of last Tuesday showing that grain yields from roughly the first half of the harvest were 29% lower than last year.

Wheat yields fell slightly faster, by 31%, to 2.21 tonnes per hectare.

Indeed, the Moscow-based consultancy on Monday stood by estimates for the overall grains harvest, if narrowing the range to 71m-72.5m tonnes, from 70m-74m tonnes.

Separately, rival group Ikar cut its forecast to 73m tonnes from 74.5m tonnes, and warned over the threat of a further downgrade.

Market reaction

On the markets, the revisions helped wheat futures overcome early weakness, although with fears for Russia already having sparked large moves in prices last week, further headway was limited.

Chicago wheat for December stood at $8.96 ½ a bushel at 06:30 local time (12:30 UK time), a gain of 0.2%.

Paris wheat for November stood 0.4% higher at E263.75 a tonne, while London November wheat roe 0.9% to set a new contract high of £202.00 a tonne.

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