MOSCOW (Reuters) — Forecasts for Russia’s wheat crop are improving after some analysts trimmed their expectations earlier this year.
Talk had circulated of the wheat crop falling to less than 50 million tonnes, but now, as more than half of the crop has been harvested, private forecaster SovEcon has lifted its outlook to 51.7 million from the previous estimate of 50.5 million.
That is up from 39 million tonnes last year, when various weather problems hurt yields.
Although the crop is expected to be larger, total wheat supply will remain tight during the 2013-14 crop year, making it difficult for traders to procure wheat at competitive prices for local customers, SovEcon said.
Rain has delayed the current harvest campaign in some regions, raising worries about damage to the crop’s quality.
The quality worry, along with the low stocks, has supported domestic prices and hurt Russia’s export competitiveness.
“Stocks are low after last year’s drought, and the (supply and demand) balance will be tight this year, especially if government take six million tonnes from the market, in line with its restocking program,” SovEcon chief executive Andrei Sizov said on the sidelines of a conference in Moscow.
Together with production, import and carry-over stocks, SovEcon expects wheat supply in Russia this 2013-14 marketing year, which started on July 1, to reach 57 million tonnes compared to demand estimated at 50 million tonnes including export and domestic consumption.
During the drought-hit 2012-13 crop year, Russia’s wheat supply fell to 50 million tonnes from the bumper crop of 71 million tonnes in 2011-12.
Russia’s government, which has about 1.2 million tonnes of grains in its reserves, had said it would buy up to six million tonnes of grains on the domestic market this autumn when the harvesting campaign is over.
The government’s plan to compete with traders for the country’s wheat coincides with weaker demand from foreign buyers, especially Egypt, the world’s biggest wheat importer, which is in the throes of a political crisis, Sizov said.
Further supply risks may come from Siberia’s wheat fields, which lie thousands of kilometres from Russia’s main seaports, but remain a key factor in determining potential exports. The wheat harvest in the Siberian Federal District, an administrative territory, which covers about a third of Russia, is at risk as the sowing campaign was delayed by a late spring, SovEcon said.
SovEcon kept its 2013-14 exportable surplus estimate at 14.5 million tonnes. It expects Siberia to harvest 14 million tonnes.
Due to tight supply, SovEcon expects Russia’s wheat stocks to reach 6.5 million tonnes by the end of the crop years June 30, 2014, up from 4.6 million tonnes at the same date in 2013 but down from 10.8 million tonnes on June 30 in 2012.