Despite the corona virus and the national restrictions that it entails, Russia manages to put away a very good grain harvest. The Institute for Agricultural Market Studies (IKAR) has therefore revised its yield expectations upwards. As a result, the country is expected to achieve the second largest harvest ever.
Russia expects the grain harvest to be just below the record set in 2017. While a large grain harvest usually results in falling world market prices, the fear of this is now less great. After all, due to unfavorable weather conditions in other European countries, the grain harvests there are a lot less positive.
IKAR has the forecast for the Russian wheat harvest this week increased by 500.000 tons to 82,5 million tons. The total grain harvest is expected to amount to 129 million tons, according to the institute. Rusagrotrans also predicts a substantial grain harvest in Russia: 128,4 million tons, of which 81,9 million tons is wheat.
Higher hectare yields
As of August 24, approximately 57,5% of the sown area in Russia had been harvested. The total harvested volume amounts to 90,2 million tons, of which 67,3 million tons is wheat. Last year, only 57 million tons of wheat had been harvested during this period. It should be noted that the area was about 3 million hectares smaller last year. However, the main reason for this larger harvest is a better hectare yield. This amounted to 2,66 tons per hectare at the end of last year, while this season it is an average of 3,29 tons per hectare. This is expected to drop slightly, because the harvest in Siberia and the Urals has yet to be completed. The harvest per hectare is generally lower there.
In any case, revenues have been growing steadily in Russia in recent years. At the beginning of this century (autumn 2000) the yield was around 1,8 to 2 tons per hectare. In 2008, the 2-ton limit was exceeded for the first time. Since the 2015 season, the yield has never fallen below 2,5 tons. In 2017, the record of 2,92 tons per hectare was set. Given current expectations and results, this record per hectare could easily be broken this season.
South has progressed furthest
The south of Russia has made the furthest progress with the grain harvest, with the Volgograd area in particular standing out positively. In this region, 4,72 million tons of grain have already been harvested, which is considerably more than the final result of the 2018/2019 season and only 500.000 tons less than in record year 2017. Taking into account the fact that approximately 200.000 hectares still have to be harvested, a new record close. It is also reported that the crop is of excellent quality.
In neighboring Rostov, 11,7 million tons have now been harvested, of which 10,4 million tons of wheat. Compared to last year, this is an increase of approximately 6% and the yield is 100 kilos per hectare higher. In the Tambov region, the grain harvest is also ahead of last season. Currently, 81% of the sown area has been harvested and the yield is around 4 million tons.
Negative effect on prices?
The positive harvest estimates in Russia have not yet led to stress on the grain market in the form of lower quotations. This is because sentiment is supported by poor harvest results from the European Union. For example, Bloomberg expects the soft wheat harvest in France to decline by 25% to 29,5 million tons, making it one of the worst results in the past 20 years. Lower results are also expected in Romania. This will probably reduce exports from the European Union by several million tons.
However, Russia does not notice much of this yet. The country has exported approximately 6 million tons of grain (including 4,8 million tons of wheat) since the start of this season. And the expectations for the coming period are also positive. It is expected that Russia will export 5,5 million tons in August, which is 3 million tons more than in July. In addition, Russian export prices have stabilized after a period of price declines. Prices are hovering around $202 per ton FOB, $1 higher than a week earlier.