MOSCOW (Reuters) — Global wheat prices are again under pressure as the production problems in North America are more than offset by the record breaking harvest that Russian farmers are currently gathering.
SovEcon, one of the leading agriculture consultancies in Moscow, last week raised its forecast for Russia’s 2017-18 grain exports.
Total grain exports are pegged at 44 million tonnes of which wheat exports are forecast at 32.4 million tonnes, up 400,000 from the last report and up more than four million from last year
Russia will likely be the world’s largest wheat exporter in the 2017-18 marketing year. SovEcon’s wheat export forecast is higher than the U.S. Department of Agriculture’s forecast of 31.5 million tonnes.
SovEcon, raised its forecast for the 2017 overall grain crop to 127.6 million tonnes from 125.2 million.
Of that, it pegged wheat at 78.9 million tonnes, up one million from its last forecast and 1.4 million more than the current USDA forecast.
That would be a record, beating last year’s crop by about five million tonnes.
While SovEcon’s wheat crop estimate rose by one million tonnes, the export outlook climbed by only 400,000 tonnes because of possible infrastructure constraints, Andrey Sizov, managing director at SovEcon, told a conference in Moscow.
The arrival of a record harvest is expected severely to test Russia’s crop storage and transport infrastructure.
Those constraints are likely to become more visible in the coming months, SovEcon said.
As of Aug. 24, Russian farmers had harvested 83 million tonnes of grain from 46 percent of the total area.
Among the risks for its crop and export estimates remain Russia’s wheat crop in the Asian part of the country and corn, as the bulk of both has yet to be harvested.
SovEcon said it expected the government to buy a million tonnes of grain for its stocks and to raise it to five million tonnes this season. Further government purchases will face financial constraints unless more funding comes from the state budget. Moscow is trying to reduce a budget deficit caused by weaker oil prices.
Year end 2017-18 grain stocks are expected to rise to 28.9 million tonnes from 21.3 million at the end of 2016-17 added.
Ukraine also has a big wheat crop that is mostly already harvested.
USDA put the Ukraine wheat harvest at 26.5 million tonnes, about the same as last year, with exports at 16 million, down from 18 million last year.