WTO, carryover stocks to help Russia wheat exports

15th Jun 2012, by Agrimoney
Agritel sounded a resilient note for Russia's wheat exports despite voicing a relatively downbeat harvest forecast, saying factors including the country's entry to the World Trade Organization would boost shipments.

The analysis group, which in May forecast this year's Russian wheat crop at 50m-53m tonnes, on Friday narrowed its estimate towards the bottom of the range, at 50.5m tonnes.

That is below estimates from other commentators including SovEcon, which has pegged the crop at 53m tonnes, and the US Department of Agriculture, which on Tuesday cut its forecast by 3.0m tonnes, also to 53.0m tonnes.

While recent rain had boosted hopes for spring crops, dryness earlier in the season had already "penalised" crops, and winter grains in regions such as Krasnodar, Lipetsk and Voronezh remain in a "delicate" position, Agritel said, in comments made following a crop tour.

WTO implications

However, the Paris-based group, which has an office in Kiev, was relatively upbeat on Russia's wheat export prospects, citing in part the prospect of healthy supplies of the grain left over from last year's bumper harvest.

It also flagged the boost to Russia's export industry from the country's forthcoming membership of the World Trade Organization, which will curtail the country's freedom to impose export restrictions as it did in 2010.

Russia's parliament will in early July debate membership proposals, with the idea of signing off on a deal by July 23.

"Once becoming a member of this organisation, it is clear that the establishment of artificial regulations, for example quotas, export taxes, will be more difficult to justify," Agritel said.

Export forecast

"With wheat ending stocks expected at around 10m tonnes, the country should be able to export 16m tonnes of wheat during the coming campaign," Agritel said.

That figure is in line with the USDA estimate, and ahead of the 14m tonnes forecast by SovEcon.

However, it will require success by merchants in sourcing wheat from regions outside the Russian South, typically a large source of export supplies, but among areas where crops have been damaged by drought.

Spring hopes

Agritel was also relatively upbeat on Russia's overall grains harvest, estimating it at 90m tonnes, down from 94.2m tonnes in 2011, compared with a SovEcon forecast of 87m-91m tonnes.

Recent rains had improved hopes of decent spring crop yields "if they receive water enough until the harvest".

The Ukraine wheat harvest was pegged at 12.9m tonnes, in line with a USDA forecast of 13.0m tonnes.