The season-2016/17 for the Russian corn became record for both segments – the grain production and exports. Thus, the share of Russian corn in the global production rose up to 25% in 2016/17 MY, against 15% in 2014/15 MY, according to the USDA.
Production
In recent years, the clear tendency of enlarging the cultivated areas under the corn was outlined in Russia. Annually the volumes of grain crops beat the record indicators of the previous years. Thus, in 2016 the cultivated areas under corn in Russia increased to 2.9 mln ha that was record for the country in that period, and in 2017 it reached the new record of 3.1 mln ha.
Also the essential gain of an average corn yield is fixed in the country and in 2016 the corn yield reached the highest rate – 5.51 t/ha. The gain of planted areas provided essential increase in total corn production – to 15.3 mln tonnes that was maximum for the moment.
As for the forecasts for 2017, the corn harvesting so far only gains steam, and as of the end of the first decade of September, the grain was gathered on 5.3% of areas, with the average yield of 4.91 t/ha at the moment (compared with 4.99 t/ha in the 2016).
By our estimates, the general yield of corn in the current season can reach 5.34 t/ha (down 0.17 t/ha to 2016). However, despite the expected decrease in this indicator, the total corn production in the current season can reach the new record – 15.9 mln tonnes (up 4% to 2016). The production gain in 2017 will be provided primarily by increasing of the planted areas.
It should be noted that the gain of areas was inherent for the majority of the federal districts of Russia. The main productive regions fall on the Southern, Central, North Caucasian and Volga districts that totally acquire 97% of all area in 2017. The largest сropland area was fixed in Krasnodar Krai (679.5 thsd ha, or 22% of all the area in 2017). Other top five states-producers are Voronezh oblast (254.6 thsd ha, or 8.2%), Stavropol Krai (242.6 thsd ha, or 7.8%), Rostov (237 thsd ha, or 7.6%) and Kursk oblasts (159.7 thsd ha, or 5.1%). More than a half of cultivated area of corn totally in the current year falls for the specified oblasts.
It should be noted that despite of being the leading one among cultivated areas, Krasnodar Krai has rather modest indicators of the yield. Thus, in 2016 the rate was 5.53 t/ha whereas in certain regions it exceeded 7 t/ha. In it’s turn, the highest yield in 2016 was noted in Moscow (8.94 t/ha), Bryansk (7.91 t/ha), Oryol (7.81 t/ha), Kursk (7.69 t/ha), Kaluga (7.41 t/ha) and Belgorod (7.23 t/ha) oblasts. At the same time, the share of each of the specified regions in the all-Russian planted areas under corn doesn't exceed 6%.
Distribution and domestic consumption
Thanks to the annual increasing of grain production, the essential gain of the general supply in Russian market is observed. Thus, in 2016/17 MY this indicator reached 16.9 mln tonnes and in 2017/18 MY is expected to reach 18.6 mln tonnes that will be the new record for the country.
While speaking about the structure of corn distribution, then the essential share goes for the domestic consumption (on average more than a half from the general supply). In 2016/17 MY this indicator was estimated at 8.7 mln tonnes (+3% to 2015/16 MY) within the bulk for feed purposes – 7.5 mln tonnes (+3% to the previous season). At the same time the feed use of corn in Russia is relatively low – 3-4% from all supply. In 2017/17 MY the specified indicator is estimated at the level of 305 thsd tonnes. The main by-products in this segment are the corn groats and its sub-products. The average output of corn groats totals 64 tsd tonnes. In October-July 2016/17 MY it was produced 55.6 thsd tonnes of corn groats that concedes by 1% to the same period of the previous season.
In the season-2017/18 further increase of domestic corn consumption volumes up to 9.2 mln tonnes is expected, while the gain will be provided basically due to the expectation of food use purposes.
Exports
Despite the domination of domestic consumption in the structure of corn distribution, during the last seasons the export volumes of corn to the foreign markets significantly increased. Thus, while in 2012/13 MY the export shipments totaled 21% of the all grain supply, in 2016/17 MY the share of export deliveries will increase to 33%. The export of Russian corn by the end of 2016/17 MY can increase to the maximum level in the history – 5.5 mln tonnes (+17% to 2015/16 MY). Confirming the dynamics, just in October-July 2017 there was delivered 5.1 mln tonnes that is already 9% higher than the indicator for all season-2015/16.
Traditionally the bulk of deliveries comes to the countries of the Middle East (41% in October-July of 2016/17 MY), followed by East Asia (21%) and the EU (17%) importers. Separately it should be noted that the essential increase in deliveries to the countries of Southeast Asia (16%), while there were actually any shipments at this direction two seasons earlier.
The 2016/17 MY marked with the essential changes in geography delivers among main importers of the Russian. By the end of 2016/17 MY the largest buyer of Russian grain became Iran, and it should be noted that in the current season the export volumes to this country increased more than 3 times in comparison with 2015/16 MY – up to 890 thsd tonnes for October-July. Vietnam took the second place - 807 thsd tonnes, which didn’t buy the Russian grain earlier. Besides, the exports to Japan rose from 13 thsd tonnes in 2015/16 MY up to 286 thsd tonnes for 10 months of 2016/17 MY. At the same time, the grain shipments to South Korea and Turkey reduced significantly in comparison with the previous season – by 24% and 17%, respectively.
In the current season, LLC Cargill (with 12% of export volume in October-July), LLC Mirogroup Resources (10.6%), LLC MZK (5.9%) and LLC TD Rif (5.2%) became the largest export-oriented companies of Russian corn. It should be noted that more than half of all grain export in the current season goes on these TOP-10 companies.
Considering the great tendencies and results of the current trade activity, it’s hardly believed that export volumes of Russian corn until 2007/08 MY didn’t exceed 80 thsd tonnes and Russia was one of the net-importers of the specified grain (in several seasons the import volumes of corn exceeded 300 thsd tonnes). Today Russia does not only provides the domestic needs for corn, but also is capable to deliver significant volumes on external markets whereas import volumes of grain don't exceed 55 thsd tonnes and are mainly presented by seeds material.
Here are the preliminary results of one more record season of corn and as we see, Russia isn't going to be satisfied yet what the forecast for 2017/18 MY confirms. For the moment being, one of the pressing problems is the existence of enough storage capacities for the great harvest and the necessary equipment for the additional treatment, especially in terms of all grains record harvest expectations in 2017/18 MY.
Julia Krekhovich, grain market analyst at APK-Inform Agency
