Russia threatened export limitations in 2012/13 after a fast start to exports diminished supplies, again pressing domestic wheat prices higher. However, prices rose, exports slowed and an official ban was avoided.

In 2013/14, USDA expects Russian exports to rebound 54 percent to 17.0 MMT thanks to higher production.

While Russian production certainly will be better than last year, persistent dry weather throughout the spring and into the summer harvest season has again resulted in lower than expected yields of new crop wheat.

The last official production estimate released by Russia’s agriculture ministry was 54.0 MMT. However, the minister this week also signaled a probable reduction in that forecast, saying Russia will “harvest no less than 50.0 MMT” of wheat in 2013/14.

This week, two leading Russian analytical firms lowered their forecasts for 2013/14 Russian wheat production. Analytical firm SovEcon lowered its forecast range by 1.0 million metric tons (MMT) to 49.5 MMT to 51.5 MMT and Russia’s Institute for Agricultural Market Studies (IKAR) cut its forecast by 3 percent to 52.4 MMT.

In Ukraine, the wheat crop faces an outlook similar to Russia. It will certainly be larger than last year, but has suffered from extremely hot and dry conditions. Analytical firm Agritel termed the early Ukraine harvest as “disappointing.”

In June, USDA lowered its 2013/14 production estimate for Ukraine from 22.0 MMT to the current 19.5 MMT. If realized, it would be 24 percent higher than 2012/13 but 4 percent below the five-year average of 20.3 MMT.

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However, in early July, the Ukrainian agricultural minister adjusted his estimated production range 1.0 MMT higher to 20.0 to 21.0 MMT. USDA expects Ukrainian exports to reach 8.0 MMT, up 14 percent from last year and slightly higher than the five-year average of 7.82 MMT.

The largest 2013/14 wheat production increase of the Black Sea countries by percentage will be Kazakhstan. According to USDA’s estimate, Kazak wheat production will reach 14.5 MMT, up 47 percent from the prior year and slightly greater than the five-year average of 14.4 MMT.

The additional supplies will allow for a 8 percent increase in exports to 7.0 MMT, which would be below the five-year average of 7.52 MMT.

The Black Sea region has emerged as a major competitor in the world wheat market in the last decade. However, inconsistent production, unpredictable export supply and the use of export policy restrictions has prevented the region from becoming a reliable supplier year to year.

The outlook is good for 2013/14 so far, but the world will continue watching closely for the next loop of the rollercoaster.

 

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