Russia Winter Grains and Export Outlook Seen Aided by Weather

Russian winter grains may be in better condition than estimated last month by the government because of warm weather in southern areas, putting the nation on track to boost cereal exports in the coming season.

Winter-crop losses will cover 9.2 percent of the sown area, according to the median estimate of 10 analysts and grain producers surveyed by Bloomberg. That compares with the Jan. 31 projection of 9.5 percent by the Federal Hydrometeorology and Environmental Monitoring Service, or Roshydromet. It puts the multiyear average at about 8.5 percent.

Russia’s grain harvest in the current season begun July 1 fell 25 percent from a year earlier by Feb. 13 after a drought hurt crops, according to Agriculture Ministry figures. Exports were a record 27.2 million metric tons in the prior season. Domestic prices at all-time highs and falling cereal stockpiles may force the country to scrap a duty on grain imports.

“I do not think at this point the crop will be as bad as last year,” Dan Hofstad, a London-based risk-management consultant at INTL FCStone Inc., said by e-mail. “As of now, I would predict wheat exports at roughly 15 million to 16 million tons.”

Russia will ship 10.5 million tons of wheat this season, according to U.S. Department of Agriculture estimates. Deliveries of all grains in the next season may be at least 15 million tons if the harvest comes to 95 million tons, Agriculture Minister Nikolai Fedorov said Jan. 31.

Reduced Inventories

The current season’s grain exports from Russia were about 13.7 million tons by Feb. 13, the ministry’s figures showed. Stocks held by leading agricultural producers and millers fell about 29 percent from a year earlier to 22.6 million tons by Feb. 1, according to government statistics.

Temperatures in Krasnodar, Russia’s biggest grain-growing region by crop size, were above freezing on most days in January and reached 15.1 degrees Celsius (59.2 degrees Fahrenheit) on Jan. 22. This month they were as high as 16.2 degrees Celsius on Feb. 7, according to figures from the national weather center.

The beneficial temperatures helped grains germinate and emerge at spots that looked dead on the eve of the winter crop’s dormancy period in early December, Oleg Sukhanov, an analyst at the Institute for Agricultural Market Studies, said by phone from Moscow.

Rostov, Stavropol

Weather was “abnormally warm” in the Southern and North Caucasus federal districts, which include the main grain-growing regions of Krasnodar, Rostov and Stavropol, Alexander Frolov, head of Roshydromet, said Feb. 14. The three regions accounted for 28 percent of this season’s national crop after harvesting 19.8 million tons of grain, government figures show.

The share of all winter crops that are weaker than average or failed to germinate dropped to about 10 percent to 12 percent in the Southern district and to 3 percent to 5 percent in the North Caucasus district, Igor Pavensky, head of the analytical department at ZAO Rusagrotrans, Russia’s biggest rail carrier of grains, said by phone from Moscow. That compared with about 16 percent in both areas in December, he said.

Russian winter crops still face weather risks before spring sowing starts in March. There is a “very high” probability that frosts will return in the Southern and North Caucasus districts this month or in March, according to Frolov. Parts of the Volga Federal District and areas in the southeast portion of European Russia are at risk from drought this year after local soils became drier in 2012, he said.

Weather Center

The Volga district, which accounted for about 20 percent of the national harvest, may have less wheat this year because of weaker winter crops in the Saratov, Samara, Ulyanovsk, Penza, Mordovia and Tatarstan areas, according to weather-center figures.

Farmers in the Volga district will probably have to replant winter wheat on 1.5 percent of the sown area, said Anna Strashnaya, head of the center’s agrometeorological-forecast department. While more than 10 percent of seeds failed to germinate on a further 35 percent of fields sown with wheat in the area, no reseeding is required there, she said. A year earlier, crops meeting that standard of weakness covered just 14 percent of the district’s sown area, she said.

Wheat touched a seven-month low of $7.225 a bushel on Feb. 13 on the Chicago Board of Trade amid speculation rains will aid crops in the U.S., the world’s biggest exporter of the grain. Prices reached a four-year high of $9.4725 in July, lifted by the worst U.S. drought since the 1930s.

Wheat for delivery in May fell 0.4 percent to $7.4225 a bushel at 6:18 a.m. London time. Prices are down 4.6 percent this year.

Winter-crop losses in Russia, which are above average, and poor winter crops in the U.S. will help support global wheat price in the first half, FCStone’s Hofstad said.

To contact the reporter on this story: Marina Sysoyeva in Moscow at msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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