Agri Commodities Preview: Russias Grain Production To Decline 10% In MY 2018/19

As per the latest forecast of United States Department of Agriculture (USDA), the total Russian grain production in MY 2018/19 to decrease to 123.7 MMT compared to 134 MMT in MY 2017/18. The decline is attributed to smaller wheat production, 11 MMT below the 2017 level due to decreased sowing area and closer-to-average yield after the 16 percent spike in 2017.

Our wheat production forecast also reflects current estimates for winter kill and slower spring planting campaign than in 2017. Growing wheat stocks and commensurate downward pressure on prices in MY 2017/18 have motivated farmers to decrease wheat acreage in favor of other crops where export demand is strong, including barley and corn. Corn harvested area is expected to increase by 20 percent buoyed by a 10 percent increase in planting area, assuming normal weather conditions for production and harvesting compared with 2017, when 10 percent of the production area was lost due to wet and cold conditions. As a result, corn production in MY 2018/19 is forecast to increase to 16.4 MMT. Barley production is expected to decrease by 883 TMT to 19.3 MMT despite increased sowing area. Barley yield is forecast weaker in MY 2018/19 based on the five-year average after a 23 percent spike in 2017 due to very good weather conditions.FAS/Moscow increased the forecast of Russias total grain exports in MY 2017/2018 from 47.24 MMT to 48.55 MMT, matching the official USDA number and based on the current pace of export shipments. Russias total grain exports in MY 2018/19 are expected to remain unchanged from 48.5 MMT estimate in MY 2017/18 based on historically high carry-in wheat stocks, stable domestic consumption and improved corn supply. Wheat exports in MY 2018/19 are forecast at 36 MMT, barley 4.5 MMT, corn 6.8 MMT and others 1.25 MMT.