Condition of winter wheat areas in Russia - on a scheduled basis

In the autumn period, operators of the Russian grain market focused their attention, not only on the current market situation, but also on conditions of winter crops planted areas, especially wheat. Taking into account the fact that in most oblasts agrarians planted winter wheat in terms of rather difficult, dry weather conditions, not only agrarians, but also grain processors followed the reporting developments with great suspense. The current article includes points of view of grain processing enterprises and agricultural producers about the current condition of winter wheat areas, and the prospects of grain replanting in the spring.

Opinions of processing enterprises

Questions for wheat processing enterprises:

1. Last but not least, the price situation on the wheat market depends on condition of winter crop areas. How do You estimate the grain condition for the moment? And what prices for wheat will develop in the beginning of 2016?
2. What share of the crop areas will be re-planted in the spring, in Your opinion?
3. Do You expect that the harvest volumes of winter wheat in 2016 will vary at the level of the current year indices?

Head of grain processing enterprise in Stavropol Krai

1. In the current season, the condition of winter wheat areas was not critical in such way that it could significantly affect the price situation. At the same time, some improvement of crops condition after precipitations in late autumn 2015, led to increasing of the selling rates of wheat. To date, the condition of winter wheat areas is generally satisfactory. According to our estimations, no more than 30% of all planted areas of the grain in our oblast are in unfavorable condition.

It is rather difficult to forecast any further development of the price situation, but taking into account the condition of winter wheat and market situation - both export and domestic segments – I suppose that the average bid prices for milling wheat will vary within 10`800-12`000 RUR/t CPT.

2. According to our data, it will be necessary to replant winter wheat throughout at least 20% of the general planted areas. However, it will be possible to make more accurate estimations after February 2016, when agrarians take monolith samples.
3. To date, there is no reason to think that wheat harvest volumes in 2016 will be lower compared with last year. The grain qualitative parameters will become the main issue, because they are not high enough in the current season.

Head of flour milling enterprise in Tambov oblast

1. It should be noted that in 2015/16 MY, we had a clear example of how timely planting campaign and the condition of winter wheat areas influence at the price situation on the market. So, in October 2015 when we started receiving some information that the winter crop areas are in unfavorable condition due to the lack of precipitations, wheat prices started somewhat rising. Agrarians held down their sales activity, but the demand rates increased, on the contrary. At the same time, as soon as the situation began changing due to rains throughout most of the country`s territory, the market prices got stabilized. Taking into account the fact that to date, at least 65% of winter wheat areas are in good and satisfactory condition, I can assume that in January 2016, the prices for milling and feed wheat in our oblast will not exceed 10`500-11`400 RUR/t and 9`700-10`000 RUR/t CPT, respectively.
2. According to our agronomists, it will be necessary to replant at least 25-30% of winter wheat areas. Moreover, if the winter is snowy and sudden temperature changes are absent, the situation will not significantly improve.
3. It is quite difficult to estimate the accurate index of wheat production in the new season, but there are no preconditions for any serious concerns. According to our information, agrarians received the required volumes of mineral fertilizers and crop protection products, and therefore, only weather can bring some surprises.

Head of grain processing enterprise in Saratov oblast

1. In the current season, we can not say that the condition of winter crops in Saratov oblast is critical, but if we estimate the losses, we should note that nearly 30% of winter wheat areas were damaged. Of course, to date the reporting factor has its serious impact at prices within the oblast, and leads to the strategy of grain sales reduction by agrarians. The offer prices for 3-grade wheat are fixed at the maximum possible level of 11`300 RUR/t EXW. I do not exclude that in the nearest future, following development of the current unsatisfactory situation with winter wheat can cause some difficulties with the price situation directly in the Volga region. However, if in most regions winter crops areas remain in the normal condition, the problem will not have its global feature and move towards the spring planting works. According to my estimations, until January 2016 the prices for milling and feed wheat will not face any significant adjustments (11`300-11`600 RUR/t and 9`700-10`000 RUR/t CPT, respectively).
2. According to our preliminary data, in the spring the crop areas for replanting of winter wheat will total nearly 30-50%. Despite the fact that to date, the current weather conditions are not critical, there are observed sudden changes in air temperature which have adverse effect on the crop areas that have satisfactory condition.
3. There are no prerequisites to think that the wheat harvest will be at the record low or high level. It is most likely that the index will vary at the average level, and it will cover all needs of the processing and livestock enterprises in the oblast. However, companies-exporters may have some difficulties with attracting of new volumes of high-quality wheat. And of course, the problem of grain qualitative characteristics will remain quite challenging.

Head of flour milling enterprise in Ryazan oblast

1. According to preliminary monitoring, the majority of winter wheat areas in the Central region has quite normal or satisfactory condition. If in September-October period there were some concerns, then in November the weather situation somewhat straightened, and agrarians lost all myths about the growth of prices in terms of unsatisfactory condition of winter crops. To date, the market witnessed some increasing of grain selling rates, and we do not exclude that in the coming weeks the prices for wheat will slightly reduce by nearly 100-200 RUR/t, to 10`300-10`500 RUR/t and 9`600-9`800 RUR/t for 3-grade and feed wheat, respectively.

However, in the long-term outlook it is quite difficult to forecast any further development of price situation because the foreign exchange factor will provide its main influence on the market segment, as well as the demand level from grain processing and export-oriented companies.

2. The field areas for replanting of winter wheat will not likely exceed 10-20% of the general areas. However, it will be possible to make more accurate estimations at the end of the winter period only.
3. It is most likely that in 2016, the harvest volumes of wheat will be slightly higher than last year.

Opinions of agrarians

Questions for agricultural producers:

1. How have the planted areas under winter wheat changed in the current season, and why have the changes taken place?
2. How do You estimate the current condition of winter wheat areas?
3. How do the condition of winter wheat areas influence at the price situation in the market segment, what prices do You expect as for the beginning of 2016?

Nikolai Mandrykin, Head of sales department of Volgograd agroindustrial company

1. The planted areas under winter wheat (within our company) were somewhat reduced, and totaled 40% of the previously planned areas. The lack of moisture content in the soil and poor germinating capacity of the grain, were the main reasons for such situation development.
2. To date, the condition of winter crops areas is quite satisfactory, we have no fears yet.
3. Until the spring, insufficient planting rates of winter wheat will not make any significant influence at the formation of prices locally (even for individual regions), or it will not influence at all. The situation will completely depend on the export volumes and the spring crops planting works. According to our forecasts, in early 2016 the average prices of 3-grade wheat will vary within 9`000-10`000 RUR/t.

Head of agricultural enterprise in Saratov oblast

1. In 2015, in Saratov oblast agrarians planted winter wheat throughout nearly 1.1 mln ha, against 1.4 mln ha in 2014. In the current year, the planned index would total nearly 1.35 mln ha, but agrarians failed to plant crops throughout nearly 300 thsd ha due to dry weather conditions, established throughout the whole territory of the Volga region. In the reporting region, the planted areas reduced in Volgograd and Saratov oblasts only, and in the whole Russia the general planted areas under winter crops remained almost stable.
2. As for the condition of winter wheat areas, it is quite acceptable. Favorable weather conditions minimized the risks which agrarians faced during the planting campaign of winter crops. To date, there are no serious concerns about winter wheat condition, but nobody knows how the situation will develop tomorrow, because it will completely depend entirely on the weather factor. If favorable weather conditions continue developing, then the share of crop planted areas which have to be replanted will not exceed 5-7%, and the harvest volumes of wheat will somewhat exceed or vary at the last year level. At the same time, despite the optimistic forecasts for the future harvest volumes, agrarians do not hurry to sell large-scale grain lots on the market, and preferred selling grains as necessary to replenish their working capital.
3. As for the further development of the price situation, I suppose that the market segment will remain stable. To date, the RUR exchange rates do not pressure on the market, and there is no any panic concerning the condition of winter crops planted areas. Therefore, there is a good chance that during 2015/16 MY, the prices for 3-grade milling wheat will not exceed 12`000 RUR/t EXW.

Ivan Belyaev, Chairman of Board of Directors of the agricultural holding Novoanninskiy (Volgograd oblast)

1. In the current season, the planned planted areas under wheat had to reach nearly 8 thsd ha. But due to the lack of precipitations and rather dry weather conditions in the Volga region during the period of crops planting campaign, its share reduced to almost 5 thsd ha.
2. To date, nearly 3 thsd ha of winter wheat areas were in good condition, while the remaining 2 thsd ha did not sprout at all, and we put them in the line of writing-off. Despite the fact that in November 2015 the weather situation somewhat stabilized, there are often observed sudden temperature drops. For example, rainy weather is often replaced by the frosts to -12°C, which in the nearest future can provide rather negative impact on crops planted areas, because they are in quite satisfactory condition to date. Generally, the forecasts directly for Volgograd oblast are rather pessimistic, because 30% of the crop areas were already lost. If we consider the condition of crops planted areas in our holding company, the situation is somewhat different, and it is not critical.
3. As for development of the price situation, in my opinion if the critical condition of winter crops is observed in Volgograd oblast only, the prices of wheat will not become subject to significant adjustments, and not exceed 11`000-11`500 RUR/t CPT. However, in the reporting oblast the demand and competition rates between companies-processors will increase.

Interviewed by Alexandrina Ovdienko, APK-Inform Agency