Russia - market of alternative grains

The article is devoted to alternative grains – rye, oats, peas that are rather important for Russian market and food security of the country.

Rye

Russia is the largest rye producer in the world after the EU with the share in global output at 18% according to the USDA.

The planted areas under rye had been declining over the last seasons in Russia. It reached 1.28 in 2016 (down 1% from 2015 and 32% from 2014). More than 75% of area is located in Volga FD.

Despite lower area rye production could rise 11% on year to 2.3 mln tonnes in 2016/17 MY. Higher yield will promote production increase, it can reach 1.85 t/ha, up 0.19 t/ha on year.

Total rye supply including carry-over stocks reached 2.8 mln tonnes this season. Mainly rye is consumed domestically while export is rather low. The domestic consumption can reach 2.6 mln tonnes in 2016/17, including 1.1 mln tonnes for food needs (flour production). Rye export can reach nearly 50 thsd tonnes. Russia exported 3.2 thsd tonnes of rye during July-October. Israel was the main destination (94% of total volume), the rest was exported to Lithuania and Ukraine.

Rye flour is the main rye product. Generally the flour output is declining in Russia except 2014/15 MY. Russia produced 637 thsd tonnes of rye flour in 2015/16 MY up 10% on year. The output reached 205.7 thsd tonnes during July-October of the current season, down 14% on year. Rye flour export is low and was nearly 5 thsd tonnes annually over the last 3 seasons. Russia exported 1.4 thsd tonnes of the product in July-October, down 20%.

The prices for rye increased in late 2015/16 MY due to limited supply. The prices started to decline seasonally in early 2016/17 MY. The purchasing prices decreased by nearly 3000 RUR/t to 6300-8600 RUR/t CPT by late August in European part. The prices in Ural and Siberian FDs declined by nearly 2000 RUR/t to 6200-7800 and 6000-7600 RUR/t CPT respectively by September.

The prices were stable in October. Since November, the purchasing prices started to grow due to limited supply and stable demand. By the end of the month, they increased by nearly 500-800 RUR/t and reached 7000-9800 RUR/t CPT in European part. However, the prices were rather stable in Ural and Siberian FDs, the bid prices totaled 6200-7800 and 6000-7600 RUR/t CPT respectively.

Oats

According to the USDA, Russia is the largest oats producer globally after the EU. Its share in total production is 21% in 2016/17 MY.

The planted areas under oats had been declining over the last 3 seasons. It reached 2.9 mln ha in 2016, down 3% on year and 9% below the result of 2012/13 MY. The Siberian FD has the largest oats area (40% of total area). Volga FD tales the second place (26-30%).

APK-Inform forecasts Russia to produce 4.5 mln tonnes of oats in 2016/17 MY that is almost equal to last year result. Thus, lower area is offset by expected higher yield at 1.66 t/ha (up 0.06 t/ha on year).

Russia mainly consumes oats domestically (95% of the grain supply). Total oats supply can reach 4.8 mln tonnes in 2016/17 MY and consumption – 4.6 mln tonnes. Oats is mainly used for feed purposes. APK-Inform forecasts Russia to use 3.4 mln tonnes of the grain for mix-feed production. Food use of oats can reach 380 thsd tonnes in 2016/17 MY.

Production of oats groats is growing since 2012/13 MY. The output reached 80.1 thsd tonnes in 2015/16 MY (up 2% from 2014/15 MY and up 75% from 2012/13 MY). Russia produces 20.2 thsd tonnes of oats groats in July-October 2016/17 MY.

Oats export is low, however it is growing during the last years. Russia exported 18 thsd tonnes of the grain in 2015/16 MY against 10 thsd tonnes year ago and 6 thsd tonnes in 2012/13 MY. The country supplied to the external market 2.5 thsd tonnes of oats during July-October of the current season. Mongolia is a traditional main destination for Russian oats who buys more than 50% of total volume. Average annual oats groats/flakes export totaled 8.1-9.7 thsd tonnes over the last 3 seasons. Georgia is the key importer (more than 30%). Russia exported 2.3 thsd tonnes of oats groats during July-October of 2016/17 MY down 16% on year.

The beginning of 2016/17 MY faced multidirectional price trends on oats market. The bid prices were declining in the European part as buyers were waiting for new crop to enter the market. At the same time, the purchasing prices were growing actively in the Siberian FD due to limited supply from farmers.

However, the prices started to decline since the first decade of July due to higher supply and moderate purchasing activity. Farmers were actively marketing oats to attract funds and empty warehouses. By August, the purchasing prices reached 5500-8500 RUR/t CPT in the European part and 7000-8500 RUR/t CPT in the Siberian FD.

The prices were rather stable in the European part since September. At the same time, they were seasonally declining in the Siberian and Ural FDs.

The price trends were multidirectional during October-November. The prices were mainly stable in many regions, while the maximum prices declined somehow in the Siberian and Ural FDs due to low demand from processors and livestock breeders. The prices increase a bit in the Central and Volga FDs due to higher demand and limited supply of large lots of high-quality oats. By the end of November, the bid prices for oats reached 6000-7500 RUR/t CPT in the European part and 6200-7800 RUR/t CPT in the Siberian FD.

Peas

Canada is the main peas producer in the world, however Russia is among the largest producers and exporters of the grain.

The planted areas under peas increased to 1.1 mln ha in 2016 up 16% on year that in combination with higher yield can lead to production growth to 1.9 mln tonnes (+13% on year) being the highest level over the last 4 seasons.

The total supply of peas including carry-over stocks can reach 2.3 mln tonnes according to APK-Inform forecasts. The domestic consumption can increase somehow to 1.07 mln tonnes including 220 thsd toones for food needs (groats production) and 520 thsd tonnes for feed purposes.

The exports of peas increased significantly over the last years. It had been growing since 2013/14 MY and reached record 703 thsd tonnes in 2015/16 MY. Turkey and India are the main destinations with common share at 60% of total exported volumes.

Russia exported 348.9 thsd tonnes of peas during July-October 2016/17 MY up 16% on year. Total export of the grain can reach record 800 thsd tonnes in the current season.

The prices for peas were declining seasonally in late 2015/16 MY and early 2016/17 MY due to supply of new crop. The prices decreased by nearly 2000-5000 RUR/t during July-September, and reached 14300-16000 RUR/t CPT in the European part, 10000-12000 RUR/t in the Siberian FD.

The prices faced multidirectional trend since October. They declined a bit in several regions in the European part due to sufficient supply and lower demand. At the same time, the prices increased in the Ural and Siberian FDs due to high demand from processors and livestock breeders. The prices stabilized by November.

Orientation on the domestic market is the common feature of alternative crops and their products that restricts development of the market. Peas is an exception during last years, its export increased significantly. If the trend to prevail in future we can see higher planted areas under peas in Russia. The trend to depend on competitiveness of Russian peas on the global market.

Julia Krekhovich, Polina Kalayda, APK-Inform Agency