In the current year, due to the droughts in Russia, experts forecast the essential production decrease of grains and leguminous plants. The range of market participants announces about their fears regarding providing the market with grain. We should note that the issue also influenced at feed grains market. In particular, according to market operators, to date it is rather hard to purchase feed barley, as opposed to other grains. And the main reason of the difficulties for buyers is not only that the prices are high.
Low demand in the last season...
As a reminder, according to the official sources, last year barley production volumes in the country totaled nearly 18 mln tonnes. Taking into account the carry-over stocks, which totaled 3 mln tonnes, such volumes completely covered the domestic consumption and allowed to supply grains for exports. The main mass of barley consumers announced that the number of barley offers was sufficient during the last MY. That is why, a lot of consumers had the possibility to form the necessary volumes for long-term work. As a result, the situation caused the decrease of barley bid prices. By the way, the interest of export-oriented companies in barley purchasing was not very active.
Thus, as of the beginning of the sowing campaign, the range of agricultural producers announced about the further review of own barley sowing areas. Due to the opinion that grain prices are too low, and the costs are too high, the agrarians decreased sowing areas in favor of other crops. As a result according to data of APK-Inform Agency, the general sowing areas decreased from 9 to 7.2 mln ha. We also should note that a lot of agricultural producers faced the shortage of the funds and/or the necessary State financing, and did not apply the required volumes of fertilizers during the growing period. We should note that according to market operators, such economy cut negatively effected at barley qualitative indices.
.… caused the deficit in the current marketing year
Thus, as a result of the anomaly heat, the most part of spring crops, including barley, essentially suffered. As a result, at the beginning of the harvesting campaign the real barley yield decreased almost by 2 times compared to the forecasted rates. We should note that according to the forecasts of analysts of APK-Inform Agency, in the current year the final barley production will total a little more than 9 mln tonnes without taking into account the imports and the carry-over stocks, which are almost twice lower compared to 2009. Taking into account the above stated facts, according to buyers estimations, while the harvesting campaign is going, the number barley offers on the market was not sufficient, meanwhile barley demand rates were rather active.
As a rule, cattle-breeding enterprises and mixed fodder producers are the main feed barley consumers on the domestic market. However, in the current season brewing enterprises also face the grain demand. The current situation is based on the essential brewing barley yield decrease in this season. Due to the fact, brewers partially form the necessary grain parties from feed barley volumes. Last year, market operators had the possibility to choose grains in accordance with qualitative parameters and announce own prices, but in the current season the situation cardinally changed.
As a result of the active barley demand, the prices continue increasing. As of the end of September 2010, feed barley purchasing prices in the European part of the country totaled nearly 7000 RUR/t CPT as opposed 3000 RUR/t on the same date last year. Due to the fact, the agrarians, having the grain volumes, hold down the sales, waiting for the further barley price increase. However, as the buyers explain, the problem is not that agricultural producers hold barley selling, due to the price increase. The main problem is the real absence of grain volumes on the market due to low barley production volumes in the current year. At the same time, we should accent that the most of barley consumers think that such high grain price level is rather adequate for the season. According to barley processors opinion, the situation is based on the objective factors, and the speculation level is minimum.
For example, the range of cattle-breeding enterprises announce that they are going to decrease barley consumption due to barley supply limitations, however they are not going to disclaim from barley purchasing at all. Specialists explain that it is difficult to change feeding diet cardinally, so they will have to search for the grain in any way. At the same time, some mixed fodder producers announce that barley bid prices are too high for them. Due to the fact, they are going to replace barley by wheat, because there is more wheat offers on the market, and sometimes wheat prices are lower than barley prices, or have the same level. At the same time, despite the refusal of the range of enterprises to purchase barley, the bid prices still face an increase.
We should also note that barley was one of the main export grain crops in Russia. However after the Russian Federation officially banned grain exports (the Government decree dated August 15, 2010), some of Russian exporters, who formed grain volumes for abroad supplies, announced about the intention to reorient barley selling on the domestic market. According to announcements of market participants, to date the exporters have no active grain sales, they just only sometimes supply small barley volumes on the domestic market as required. The export-oriented enterprises note that due to the remaining unchanged growth of barley price, they will not hurry to sell barley volumes. According to exporters opinion, the optimum period for barley sales on the market is the period of the harvesting campaign finishing, when agrarians will know the exact grain production data in Russia, and they will define the further price range forming.
While talking about the further price situation development, we should note that according to the most of market participants, at the present stage barley bid prices will continue increasing, because barley stocks will decrease according to the domestic market consumption. Thus, a lot of market operators announce that it is too early to talk about the real imports of the grain. According to the opinion of the range of the enterprises, due to the trust absence to the data announced by the Government authorities, they desire to understand everything by themselves, what barley volumes agrarians from Russian oblasts and regions will harvest, and only after receiving of the data, the enterprises will suppose regarding barley purchasing from other countries.
At the same time, according to the preliminary estimations of APK-Inform Agency, in the current year in Russia grain import volumes will total nearly 1200-1400 thsd tonnes.
While talking about the general situation estimation, the range of market participants still do not give any long-term forecasts. At the stage the main issue for them is the final grain production volumes in Russia. Market operators note that it is possible to plan anything by barley selling and purchasing only after the market realities will be known.
the expert of Russian market of feed grains of