Russian wheat exports will remain scarce next year and possibly into 2012, says a leading global financial services firm.
After sending analysts to Moscow, Morgan Stanley is forecasting 53 million tonnes of Russian wheat production in 2011-12, up from 42.5 million tonnes this year.
That would be a far cry from the 61.7 million tonnes produced in 2009-10 and 63.7 million tonnes in 2008-09, which is why the bank is forecasting continued strong global wheat prices.
It predicts Chicago wheat futures will average $7.50 US a bushel in 2010-11 and $7.25 per bu. the following year, which is down from summer highs but up from current levels.
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Jerry Norton, grain analyst with the U.S. Department of Agriculture’s World Agricultural Outlook Board, said he couldn’t comment on Morgan Stanley’s production numbers because he hadn’t developed a 2011-12 forecast, but he added the direction sounds right.
“Under normal situations and normal weather, (Russian production) should rebound but it certainly won’t go back to the levels we saw in 2008 and 2009.”
He said Russian farmers have had problems planting the winter wheat crop in parched soil. Spring planting will likely rise, but the yields are lower than winter wheat.
Russian agriculture minister Elena Skyrnnik said last week that farmers will likely plant 38.3 million acres of winter grain, down from 45.7 million acres the previous two years but up from earlier government estimates of 29.6 million acres.
Morgan Stanley agreed with that estimate but said shallower plantings because of dry conditions significantly increase the risk of winter-kill if the weather proves colder than normal, as some analysts are expecting.
Skyrnnik has established a goal of 70.4 million acres of spring wheat plantings, up 20 percent from last year. However, Morgan Stanley said in its outlook that next year’s spring wheat crop will be smaller than expected because of a seed shortage.
Russia recently extended its wheat export ban to June 30, 2011, from Dec. 31, 2010.
The bank is forecasting seven million tonnes of Russian wheat exports in 2011-12, double this year’s expected shipments but well below the more than 18 million tonnes exported in each of the two years before the devastating 2010 drought.
Norton agreed that exports will likely rise but not to pre-2010 levels because Russia will need to rebuild its depleted stocks.
Morgan Stanley called its seven million tonne estimate an optimistic forecast, which means the world will have to rely more heavily on U.S. wheat in the upcoming year.
“Exports from the U.S. could rise to a record 50 million tonnes, which would tighten the U.S. balance from today’s lofty levels and likely provide support to wheat prices,” the bank said.
