The record high grain harvest in Russia is putting the export apparatus to the test. It creaks and squeaks on all sides. What effects does that have on the market?
Experts previously expressed their expectation that Russia could become the largest wheat exporter in the world in the 2017-2018 market year. However, the export machine has great difficulty in getting rid of the record volume of wheat. That writes the International Grains Council (IGC) in their most recent forecast.
Still a record
Exports are currently stalling on the Russian railway and in the ports, so that the quantities that the country hoped for cannot be exported. Market analysts therefore expect that not 35 but 30 million tons of wheat will be exported in 2017-2018. If it manages to reach that 30 million, the country will still have a record.
The IGC estimates the total wheat harvest at 32,1 million tons, an increase of 2,1 million tons compared to the July forecast. Compared to the same period last year, the level is 4 million tons higher.
Mapping Problems
The Russian Ministry of Agriculture acknowledges that exports are stalling. This has already been discussed in mid-August. That is why a group of experts has been put together who must jointly map out the logistical problems in order to be able to take action. This team brings together representatives of the Ministry of Agriculture, the grain export sector and the Rosselkhoznadzor Inspection Service.
Shifts in top 3
The Russian mega harvest weighs on expectations for EU exports. The IGC is therefore more pessimistic than last month. The total export volume has been revised downwards by 900.000 tons to 29,9 million tons of wheat. This still means an increase of 1,6 million tonnes compared to last year. This puts the EU in second place in the world export list, followed by the US with 26,5 million tonnes.
During the 2016-2017 season, the US was the leader with 28,7 million tons. In total, the IGC estimates the international wheat trade at 172 million tons. That is a reduction of 3 million tons compared to last year. A significantly higher Russian harvest will not change that.
Harvest not completed
Expectations may be good, but not all Russian wheat is behind the shelves. By the end of August, according to the Ministry of Agriculture, 62 million tons of winter and spring wheat had been harvested, 4 million tons more than in the same period last year.
The IGC experts in London expect a total volume of 80 million tons, 7,5 million tons above last year. The record harvest is mainly due to a higher yield per hectare.