Russian market of maize: tendencies and prospects

Source

APK-Inform

Taking into account the interest of the market participants for the current situation on the Russian market of maize, APK-Inform Agency provides the estimation of the tendencies and prospects of the season-2010/11 MY.

The first half of the season-2010/11 maize market faced the record prices increase. The major reason was rather essential maize supply volumes decrease on the market, due to the droughts. In general, according to the estimation of APK-Inform Agency, this season supply volumes decreased by 21% compared to the last season and totaled 3.7 mln tonnes. Last time Russia harvested such low level of grain in 2005, when the country produced 3.06 mln tonnes of maize (in 2009 grain production volume totaled about 4 mln tonnes).

Also, taking into account, that the major share of maize harvest (over 80%) is produced in the South and the North Caucasian Federal Districts, the essential factor caused the prices growth was the limitation for the domestic grain transportation due to the quarantine put of the African swine fever. As a result, the necessity for receiving of the permission of the veterinary service for grain transportation and the demands toughening for its transportation (grain additional  heat treatment, higher demands for the cars sanitary treatment and other) cause the growth of grain transportation from the stated regions. Also we faced the problems at the level of cooperation of the veterinary services in the regions. There was the cases, when the veterinary services of the certain region allowed grain transportation from the quarantine zone, meanwhile the veterinary services of the supply region barred from its entry, which was due to the absence of the necessary cooperation of the veterinary services on the federal and regional levels.

Except of the records prices increase the feature of the current season is Russia role changing on the world market of maize trade. Thus, during the last two season, the essential supply volume exceed over the country domestic demands for the current grain allowed the Russian Federation to enter the top-10 of the countries-leaders for maize export volumes. This season Russia will become the netto-importer of maize again. According to the estimation of APK-Inform Agency, grains import till the end of 2010/11 MY may face an increase till 300 thsd tonnes as opposed to 33 thsd tonnes in 2009/10 MY and 56 thsd tonnes in 2008/09 MY. The range of the factors will cause it: maize supply volumes decrease on the domestic market, the ration of the domestic and world prices, and also the difficulties for grain transportation within the country from the major regions-producers of maize to the regions of its consumption due to the put of quarantine.

Thus, according to the last data, during the seven months of 2010/11 MY (October-April) Russia imported about 83.5 thsd tonnes of maize. The major import share is grain for fodder purposes -47% (39.6 thsd tonnes), then milling grain – 27% (22.4 thsd tonnes) and seed material – 26% (21.5 thsd tonnes).

Traditionally large maize supplier to Russia is Ukraine, which share totaled 74% according to the results of 10 months of the current season, or 74% (62.1 thsd tonnes) from the general import volumes. Maize large volumes were also supplied from Hungary (8.3 thsd tonnes) and Romania (4.7 thsd tonnes).

If we talk about the tendencies of maize consumption, but this season they expect rather essential decrease of its almost for all the directions. However the most essential decrease is expected in maize consumption for fodder purposes. Due the rather high prices level for maize, its consumers in the live-stock sector will try to replace it in the ration of the animals. In total, according to our estimations, the domestic maize consumption in 2010/11 MY will decrease by 10% compared to the previous season and will total about 3.5 mln tonnes, including fodder consumption decrease by 11% - till 2.9 thsd tonnes.

Maize supply and demand balance for Russia, thsd tonnes, thsd ha 
  2007/08 2008/09 2009/10 2010/11*
The beginning stocks 384 291 739 359
The sowing area 1 509 1 812 1 365 1 416
The harvesting area 1 296 1 731 1 123 1 028
Yield, c/ha 29,3 38,6 35,3 30,0
General production 3 798 6 682 3 963 3 084
Imports 358 56 33 300
Total supply 4 540 7 030 4 735 3 743
Consumption: 4 200 4 960 3 950 3 540
milling 260 260 260 250
fodder 3 500 4 190 3 245 2 890
seeds 120 120 125 125
losts 150 220 150 110
other 170 170 170 165
Export** 49 1 331 427 0
Export** 49 1 331 427 100
General distribution 4 249 6 291 4 377 3 540
Ending stocks** 291 739 359 203
Ending stocks** 291 739 359 103
* The forecast of APK-Inform Agency 
** If grains export ban is valid till the end of the season
*** If the export will be opened

As about maize export, this season, despite the fact that grain exports ban expires in June, there is the probability that it will not. In total, according ot the announcements of the authorities, there is the high chance of grain exports ban prolongation till autumn of 2011. However even if maize export will be opened, its export potential for the current season will not exceed 100 thsd tonnes, which is essentially lower of the last season ratio (427 thsd tonnes).

This season Russia will finish with rather low carry-over stocks, which according to our estimations will total about 203 thsd tonnes, down by 1.8 times of 2009/10 MY (under the condition of export opening and taking into account the current export potential the ending stocks will total about 103 thsd tonnes). In general, such low maize stocks volume Russia had in 2003/04 MY, when the ending stocks totaled 72 thsd tonnes.

It is too early to talk about the prospect of the new 2011/12 MY for maize, but the same as with other grains, the key factor for situation improvement will be new crop for the current season. According to the forecasts of our agency, maize crop in 2011/12 MY is estimated at the level of 3.7 mln tonnes – the most pessimistic forecast, and 5 mln tonnes – the most optimistic forecast. In the case if the pessimistic becomes true the current season tendencies may be repeated, meanwhile the optimistic one will allow Russia to take the worthy place among the countries-exporters of maize.

Julia Krehovich

the export of the Russian grain market

APK-Inform Agency

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