Russia - market of alternate grain crops in 2016/17 MY, and the prospects for 2017/18 MY

Source

APK-Inform

1894

 

Peas is one of the most dynamically developing crops of a niche market segment of Russia, and 2016/17 MY was marked by the records of it’s production and exports. Unlike peas, rye and oats are more focused on the domestic market, and due to limited demand their development isn't so active. Hereinafter, we may consult the supply and demand balances of such alternate crops as rye, peas and oats for 2016/17 MY, and also present the forecasts for 2017/18 MY.

 

Rye

Key points

In recent years the decrease in interest of rye production is clearly observed in Russia due to reduction of the planted areas under the grain. Thus, in 2016 the planted areas under the specific grain totaled 1.3 mln ha (down 2.4% compared with 2015). At the same time, due to favorable weather conditions and high safety of winter rye planting (as practically all rye in Russia is presented by winter grades) essential increase of yield was observed – to 2.03 t/ha, up 0.36 t/ha compared with 2015/16 MY). Thus, despite reduction of the planted areas, the total production of rye increased to 2.5 mln tonnes (+21.8% to 2015/16 MY).

Taking into account the carry-over stocks, the general supply of rye was estimated at 3 mln tonnes in 2016/17 MY that is 4% lower than that of 2015/16 MY. In general the specified volume fully covered domestic needs of the country which, by estimations of APK-Inform Agency, totaled 2.53 mln tonnes (-3.4% to 2015/16 MY).

In the structure of domestic consumption the main share goes for food purposes, however due to the tendency of deceasing volumes of flour rye production in Russia during recent years, food consumption of rye systematically falls, and it is estimated at 1 mln tonnes (-2% to 2015/16 MY) in 2016/17 MY.

Export rye deliveries significantly fluctuate depending on the season and during last years are characterized by a bearish tendency. Thus, in 2015/16 MY nearly 48 thsd tonnes of rye were exported on foreign markets, in 2016/17 MY – only 7 thsd tonnes. The main buyers of Russian grain in the season-2016/17 were EU countries (with total share of 57% export during the season) and the Middle East (with 41% share).

The tendency of decreased planted area under the rye remained in 2017 and, according to Rosstat, the grain was seeded on 1.2 mln ha that is 4% lower than that in 2016. The total rye crop in 2017/18 MY is estimated at 2.3 mln tonnes (-7.9% to 2016/17 MY) and the general supply of grain can total 2.8 mln tonnes (-6.5% to 2016/17 MY).

Domestic consumption is estimated at the level of 2.5 mln tonnes in 2016/17 MY. However, considering bearish tendency of flour rye production the further descent of crop volumes isn’t excluded.

Besides, accounting for inconstancy of export volumes, it is difficult to give an accurate assessment of its forecast for the current season and we define the indicator at the level of 2016/17 MY - 10 thsd tonnes. However, the ratio of offer and consumption allows Russia to put on foreign markets nearly 50 thsd tonnes and more.

 

Supply and demand balances of rye in Russia, `000 tonnes

 

2015/16

2016/17

2017/18

Changes, %

16/17 to 15/16

17/18 to 16/17

2017/18 Jul.-Jun.

Beginning stocks

1 061

482

487

-54,6%

+1,1%

+10,7%

Planted areas, `000 ha

1 291

1 260

1 209

-2,4%

-4,0%

-13,6%

Harvested areas, `000 ha

1 251

1 252

1 165

+0,04%

-7,0%

-13,7%

Yield, c/ha

16,7

20,3

20,1

+21,7%

-1,0%

+5,2%

Production

2 087

2 541

2 340

+21,8%

-7,9%

-9,1%

Imports

1,99

1,54

1,55

-22,6%

+0,4%

-22,5%

Total supply

3 149

3 025

2 829

-4,0%

-6,5%

-6,2%

Consumption:

2 620

2 530

2 510

-3,4%

-0,8%

-2,3%

food

1 020

1 000

1 000

-2,0%

 =

-1,0%

feed

800

750

700

-6,3%

-6,7%

-6,7%

seeds

230

220

250

-4,3%

+13,6%

 =

losses

100

90

90

-10,0%

 =

 =

others

470

470

470

 =

 =

 =

Exports

48

7

10

-84,8%

+37,7%

-66,7%

General distribution

2 668

2 537

2 520

-4,9%

-0,7%

-3,1%

Ending stocks

482

487

309

+1,1%

-36,6%

-26,0%

Stocks-to-distribution ratio

18%

19%

12%

 

 

 

 

 

In 2016/17 MY the Russian enterprises were managed to produce 594 thsd tonnes of rye flour that is 6% lower than the previous season. The main volumes production accounts on enterprises of the Volga District (34% of 2016/17 MY production). Also, essential volumes were produced in the Siberian (12%) and Northwestern (11%) Districts.

 

 

In 2016/17 MY Russian rye export totaled 7 thsd tonnes against 48 thsd tonnes the previous season and 114 thsd tonnes in 2014/15 MY. Export process in 2016/17 MY is carried out unevenly and it is possible to allocate only two peak months during which all the shipments were really exported – August and May, while the trading activity in other period were extremely low or completely absent.

It should be noted that Latvia was the largest buyer of Russian rye two seasons earlier, taking nearly a half of the grain exports. In 2016/17 MY, however, the deliveries in this direction were completely absent. Last season the largest export volumes of grain accounted on the Netherlands and Israel (totally 97% of rye exports).

 

 

Price tendencies

Concerning the price development in the market of food rye it should be noted that at the end of 2016/17 MY the prices increase in the European part of the Russian Federation. Many representatives of processing enterprises felt need for urgent replenishment of stocks. At the same time, the number of offers was estimated as limited. Large-capacity batches of a rye practically didn't come to the market. Thus, from the second half of June to the mid-July purchasing prices for the grain in the European part grew by nearly 500 RUR/t, and were announced within 7`800-9`000 RUR/t CPT.

Along with it, the price situation in the Siberian Federal District during the specified period didn't undergo essential changes that were caused by enough offers in terms of reasonable demand from consumers.

In the third ten-day period of July the offers for 2017 rye harvest started to come to the market in the Southern and Central Federal Districts of the Russian Federation resulted in bearish price tendency. The average bid prices for grain fell for 300 RUR/t and by the end of July were recorded within the range of 7`500-8`500 RUR/t CPT. Let us note that quality indicators of the specified crop were often estimated as conforming to requirements of state standard specification.

 

Peas

Key points

Peas is one of the most dynamically developing leguminous crops and during recent years the essential growth of it’s production is observed. Thus, in 2016 the crop of leguminous totaled 2.2 mln tonnes that is 22% higher than in 2015/16 MY. Such an indicator is the highest rate for Russia for two last decades. The gain of production was caused by an increase of the planted areas in 2016 to 1.1 mln ha (+14% to 2015/16 MY), as well as increasing of the average yield to 2.11 t/ha (up 0.25 t/ha to the previous season).

In 2017/18 MY the peas did not lose it’s relevance what is confirmed by increasing of the planted areas under the crop to 1.3 mln ha (+25% to 2016/17 MY), what is the highest rate since 1995 (1.4 mln ha). Gross collecting of leguminous can surpass the indicator of 2016/17 MY by 18% and reach 2.6 mln tonnes.

The domestic consumption of peas is estimated at 1.2 mln tonnes in 2016/17 MY with 220 thsd tonnes used in food and 570 thsd tonnes – in feed purposes. There are no essential prerequisites for consumption growth in 2017/18 thus the domestic need of Russia for the reporting crop is estimated at 1.3 mln tonnes.

Considerable support to peas production in Russia is given by the gain of export deliveries observed in recent years. The export shipments of peas increased to record-breaking rate by 2016/17 MY - 719 thsd tonnes (that is 2% higher than that of 2015/16 MY and 2.4 times above than in 2013/14 MY). In 2017/18 MY, taking into account the offer/consumption ratio the new record peas export volumes isn’t excluded. Meantime, for the moment the preliminary forecast of export is 800 thsd tonnes, however, more than 1 mln tonnes can be exported in general for the season.

 

 

Supply and demand balances of peas in Russia, `000 tonnes

 

2015/16

2016/17

2017/18

Changes, %

16/17 to 15/16

17/18 to 16/17

2017/18 Jul.-Jun.

Beginning stocks

384

309

582

-19,5%

+88,1%

-26,0%

Planted areas, `000 ha

942

1 072

1 343

+13,8%

+25,3%

+22,1%

Harvested areas, `000 ha

922

1 024

1 303

+11,0%

+27,2%

+22,1%

Yield, c/ha

19

21

20,0

+13,4%

-5,3%

=

Production

1 716

2 199

2 602

+28,2%

+18,3%

+22,1%

Imports

11

13

10

+17,2%

-21,4%

 =

Total supply

2 111

2 521

3 194

+19,5%

+26,7%

+9,5%

Consumption:

1 098

1 221

1 281

+11,2%

+4,9%

+6,5%

food

210

220

220

+4,8%

 =

 =

feed

540

570

610

+5,6%

+7,0%

+1,7%

seeds

280

350

350

+25,0%

 =

+20,7%

losses

63

76

96

+20,6%

+26,3%

+9,1%

others

5

5

5

 =

 =

 =

Exports

703

719

800

+2,2%

+11,3%

+6,7%

General distribution

1 801

1 940

2 081

+7,7%

+7,3%

+6,6%

Ending stocks

309

582

1 113

+88,1%

+91,3%

+15,4%

Stocks-to-distribution ratio

17%

30%

53%

 

 

 

 

 

As it was already mentioned, the export of peas in 2016/17 MY reached the record level for Russia – 719 thsd tonnes. Traditionally more than a half of export accounts for countries of the Middle East, with Turkey as the largest importer (that takes 50% of leguminous export in 2016/17 MY). At the same time, it should be noted that for the last two seasons the delivers of Russian peas rose considerably to the countries of the Southern Asia (29% in 2016/17 MY, against 7% in 2014/15 MY). The main buyers among the countries of this region are India (15% of export share in 2016/17 MY) and Pakistan (8%). The share of Bangladesh in Russian export market also significantly increased – to 6% in 2016/17 MY, against 0.1% in 2014/15 MY.

 

 

Price tendencies

In anticipation of the 2017/18 MY start (June 2017) the price situation in the peas market developed in a bearish trend. Such a situation was caused by the reduction of consumer’s activity under the influence of seasonal factor. The purchasing prices for the specified period fell for 1`500-2`000 RUR/t. Thus, by the end of June the bid prices in the European part varied in the range of 10`000-13`000 RUR/t of CPT. While purchasing prices within 8`300-10`500 RUR/t CPT were inherent to the Siberian District.

Over the most part of July, there were no essential price changes in the segment of peas. Many consumers didn't show active interest for purchases, expecting on mass revenues to the market of new harvest leguminous offers. In it’s turn, agrarians offered to realize their crop by small volumes only as required, without essential changing in selling prices.

In the last week of July in the Southern District reduction of prices against the background of a seasonal factor was noted. Agrarians offered new crop peas at lower selling prices. In it’s turn, consumers made purchases as required, gradually reducing demand prices. Decrease in the specified District varied within 300-500 RUR/t – to 10`000-12`500 RUR/t of SRT.

In the last week of July, some drop in prices was observed in the Southern District due to the seasonal factor. Agrarians offered new crop peas at lower selling prices.

In the Southern District, reduction of prices against the background of a seasonal factor was noted. Agrarians offered new crop peas at lower selling prices. In it’s turn, consumers made purchases as required, gradually declining bid prices. In the mid the decrease in the specified District totaled 300-500 RUR/t – 10`000-12`500 RUR/t CPT.

 

Oats

Key points

In 2016/17 MY, the oats production reached 4.8 mln tonnes that was 5% more than the previous season. The gain of production was caused by the increase of the average yield to 1.73 t/ha (against 1.6 t/ha in 2015/16 MY) whereas the planted areas reduced by 6% in comparison with the previous season, and totaled 2.9 mln ha.

In 2017/18 MY the planted areas under oats totaled nearly 3 mln ha (+4% to 2016/17 MY), and the the total crop is estimated practically at the level of 4.7 mln tonnes (-0.4% to 2016/17 MY).

The general supply of oats in 2016/17 MY taking into account the ending stocks totaled nearly 5.1 mln tonnes, in 2017/18 MY it can reach 5.2 mln tonnes. It should be noted that the small gain of such an indicator in the next season is just for the increase in the carry-over stocks.

Oats belong to the grain crops more focused on the domestic market, while the domestic consumption takes more than 90% of the total supply. In 2016/17 MY the demand of Russia for the oats was estimated at 4.6 mln tonnes, with the main share of consumption for the feed sector – 3.4 mln tonnes. Food consumption of oats is estimated at 340 thsd tonnes.

In 2017/18 MY, the domestic consumption of oats can total 4.7 mln tonnes (+2% to 2016/17 MY) with the gain in a large extant caused by the increase in feed use – up to 3.5 mln tonnes.

Export supply of oats is extremely insignificant and for the last several seasons didn't exceed 20 thsd tonnes. In 2016/17 MY, the exports of oats reached 13 thsd tonnes (-31% to 2015/16 MY).

 

Supply and demand balances of oats in Russia, `000 tonnes

 

2015/16

2016/17

2017/18

Changes, %

16/17 to 15/16

17/18 to 16/17

2017/18 Jul.-Jun.

Beginning stocks

407

347

497

-14,9%

+43,4%

+14,2%

Planted areas, `000 ha

3 045

2 857

2 981

-6,2%

+4,4%

+0,5%

Harvested areas, `000 ha

2 831

2 742

2 755

-3,1%

+0,5%

+0,5%

Yield, c/ha

16,0

17,3

17,2

+8,1%

-0,5%

 =

Production

4 536

4 761

4 741

+5,0%

-0,4%

+0,5%

Imports

2

12

8

в +6 раз.

-30,8%

 =

Total supply

4 945

5 120

5 246

+3,5%

+2,5%

+1,6%

Consumption:

4 580

4 610

4 720

+0,7%

+2,4%

+1,5%

food

340

340

340

 =

 =

-10,5%

feed

3 400

3 400

3 500

 =

+2,9%

+2,9%

seeds

630

660

660

+4,8%

 =

+1,5%

losses

160

160

170

 =

+6,3%

 =

others

50

50

50

 =

 =

 =

Exports

18

13

15

-31,2%

+18,8%

-50,0%

General distribution

4 598

4 623

4 735

+0,5%

+2,4%

+1,2%

Ending stocks

347

497

511

+43,4%

+2,8%

+6,2%

Stocks-to-distribution ratio

8%

11%

11%

 

 

 

 

 

In 2016/17 MY, the production of oats groats totaled 63.5 thsd tonnes that is 14% lower than the previous season. More than half of all groats production developed in the Siberian District.

 

 

The export volume of oats in 2016/17 MY reached 12.6 thsd tonnes that is 31% lower than the last season. The largest buyer of the Russian oats is Mongolia whith total share of Russian export market in 2016/17 MY of 77%.

 

 

Price tendencies

During the off-season period (June 2017), the price situation in the oats market was assessed as rather stable. The producers preferred to constrain their sales, announcing the selling prices closer to maximum. According to market operators, such a position of agrarians was explained by the fact the most of them counted on increase in prices in the short term. The offers for oats with high quality characteristics practically didn't come on the market, at the same time requirements of processors for new materials also were low. Bid prices for oats in June in the European part of the country were fixed within 6`500-8`500 RUR/t CPT, while in the Siberian District – 6`200-8`300 RUR/t CPT.

Let us note that there were no essential price changes for the specified crop in July, and the prices were preferentially declarative owing to seasonal factors.

 

Yulia Krekhovich, grain market analyst at APK-Inform Agency

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