Russia, Ukraine and Kazakhstan's combined
wheat crop will fall to 78.9 million tonnes this year, down 22 percent from
2011, with the biggest impact on yields from winterkill and spring drought in
the Black Sea wheat powerhouses of Russia and Ukraine, a Reuters poll of 19
traders and analysts showed.
Concerns over falling wheat crops in Russia, Ukraine and Kazakhstan have lent support to global wheat markets this year, which anticipate a decline in shipments from the region which supplies around a quarter of world export volumes. Reduced crop prospects in the Black Sea region has coincided with a sharp deterioration in the outlook for the US corn crop to help spark a sharp rise in grain prices. Wheat prices in Paris have risen about 20 percent so far this year with the key new crop November contract peaking at 230.00 euros ($290) a tonne earlier this week, its highest level since May 2011.
"Recently there has been a palpable shift in sentiment (in grain markets) as a slew of both current and potential weather scenarios have reared their head," Barclays Capital analyst Sudakshina Unnikrishnan said in a market note this week. Though Russia, Ukraine and Kazakhstan are all expected to see declines in their harvests this year, Kazakhstan, whose harvest is expected to be hardest hit, could still sustain record exports this year with help from high stocks. Russia's median wheat crop forecast stood at 50.5 million tonnes, down from last year's 56.2 million tonnes, while over a third of respondents saw Russia's wheat crop below 50 million tonnes.
The lowest estimate came from Russia's Agriculture Ministry, which made a long expected reduction in its outlook on Monday, forecasting 47.5 million tonnes of wheat. Higher forecasts could be subject to downgrade, analysts said. "In my view this is the first pertinent estimate," said a western European wheat analyst.
"There is still the whole of July to get through and the weather forecasts are not favourable. We shouldn't forget that in 2010 when the harvest was devastated the damage was done in July and August." The poll suggests that Russia, which returned as the world No 3 wheat exporter after 2010's drought, will decrease its grain harvest to 85.5 million tonnes from 94 million tonnes.
Ukraine's grain crop is expected to fall to 44.9 million tonnes, of which wheat can account for 13.6 million tonnes. Hardest hit is Kazakhstan, expected to harvest 16.6 million tonnes of grain, down from 27 million tonnes in 2011, of which wheat may account for 14.8 million tonnes.
The median forecast for total grain crops in the three countries is 147 million tonnes, a 17 percent decrease. The hit from the drought is a key contributor to a deficit of wheat forecast this year on the world market, seen by the USDA and the International Grains Council at about 10 million tonnes, Commerzbank noted in a research report this week. "Supplies are expected to shrink more rapidly than demand," Commerzbank analysts said.
Concerns over falling wheat crops in Russia, Ukraine and Kazakhstan have lent support to global wheat markets this year, which anticipate a decline in shipments from the region which supplies around a quarter of world export volumes. Reduced crop prospects in the Black Sea region has coincided with a sharp deterioration in the outlook for the US corn crop to help spark a sharp rise in grain prices. Wheat prices in Paris have risen about 20 percent so far this year with the key new crop November contract peaking at 230.00 euros ($290) a tonne earlier this week, its highest level since May 2011.
"Recently there has been a palpable shift in sentiment (in grain markets) as a slew of both current and potential weather scenarios have reared their head," Barclays Capital analyst Sudakshina Unnikrishnan said in a market note this week. Though Russia, Ukraine and Kazakhstan are all expected to see declines in their harvests this year, Kazakhstan, whose harvest is expected to be hardest hit, could still sustain record exports this year with help from high stocks. Russia's median wheat crop forecast stood at 50.5 million tonnes, down from last year's 56.2 million tonnes, while over a third of respondents saw Russia's wheat crop below 50 million tonnes.
The lowest estimate came from Russia's Agriculture Ministry, which made a long expected reduction in its outlook on Monday, forecasting 47.5 million tonnes of wheat. Higher forecasts could be subject to downgrade, analysts said. "In my view this is the first pertinent estimate," said a western European wheat analyst.
"There is still the whole of July to get through and the weather forecasts are not favourable. We shouldn't forget that in 2010 when the harvest was devastated the damage was done in July and August." The poll suggests that Russia, which returned as the world No 3 wheat exporter after 2010's drought, will decrease its grain harvest to 85.5 million tonnes from 94 million tonnes.
Ukraine's grain crop is expected to fall to 44.9 million tonnes, of which wheat can account for 13.6 million tonnes. Hardest hit is Kazakhstan, expected to harvest 16.6 million tonnes of grain, down from 27 million tonnes in 2011, of which wheat may account for 14.8 million tonnes.
The median forecast for total grain crops in the three countries is 147 million tonnes, a 17 percent decrease. The hit from the drought is a key contributor to a deficit of wheat forecast this year on the world market, seen by the USDA and the International Grains Council at about 10 million tonnes, Commerzbank noted in a research report this week. "Supplies are expected to shrink more rapidly than demand," Commerzbank analysts said.
Copyright
Reuters, 2012
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