Crops in Russia, Ukraine and eastern Europe are looking a little less monstrous this year after a difficult winter and bad spring weather hit many regions.But the region’s crops have enough potential and time to give the markets a scare if conditions are right, with prairie farmers already suffering from the blow received last fall when grains from eastern Europe began pouring into world markets.”Yes, it’s smaller than last year, but last year was huge,” said Canadian Wheat Board world crop conditions analyst Bruce Burnett about the recent reductions to Russian crop prospects by private and government authorities.”Their estimates are still rather large.”Russia’s crop ministry said May 31 it is downgrading its production expectation to 88 to 90 million tonnes of grain from the previous forecast of 97 million tones.That would equal last year’s production and remain above trade estimates averaging 87 million tonnes.Ukraine has dropped its wheat estimate.It now expects to be 18 million tonnes, down from 20.9 million tonnes last year.That’s due to a harsh winter damaging winter wheat and causing much reseeding to spring wheat and other crops.Across the region, problems are reported for winter crops from harsh winter conditions and saturated spring soil. The region has recently shown itself able to produce and export huge crops, which undercuts Canadian export sales.Prairie farmers focus on top quality spring wheat and are developing markets for specialty canola oils, but the lower quality products from eastern Europe and former Soviet countries draw down the bottom end of the market and limit premiums for higher grades.In the May 27 CWB Pool Return Outlooks for 2009-10 and 2010-11, the effect of the glutted market for lower grade wheat can be seen in the slightly lowered prices for those grades versus top quality wheat.And in its commentary, the board identified the overall grain glut as the main cause for the weak prices for high quality wheat.”Stocks have not been this big since 2001-02, but total supply is unparalleled and represents the third straight year of increase,” said the 2010-11 PRO commentary.”Global wheat demand has failed to keep pace with production and the end result has been a 60 percent growth in ending stocks in three years.”Grain shipped from Black Sea ports is capturing markets normally supplied by North American crops and that is weakening prices.On May 31, Russian analysts reported that 180,000 tonnes of 11.5 percent protein had been sold to Egypt for $178.50 US per tonne.Burnett said the recent crop damage in the region shouldn’t make a big difference to prices unless it is the beginning of a trend of yield reducing problems.”Throw in a (damaging) wind and a pest or two and then we’re talking, but I don’t think this is enough yet to get the market talking,” said Burnett.”Now that we have confirmed that it’s not as big as last year, then if we take it down a notch, it might be significant.”– With files from Reuters News Agency
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