Voluntary Report - public distribution

**Date:** 2/4/2005

**GAIN Report Number:** RS5006

RS5006

**Russian Federation**

**Grain and Feed**

**February 2005 Update**

**2005**

**Approved by:**

![](media/image1.wmf)Allan Mustard

U.S. Embassy

**Prepared by:**

Yelena Vassilieva and Dorothy Adams

**Report Highlights:**

Total production increased to 78 million metric tons (mmt), a sixteen
percent increase from the previous year, due to a good winter wheat
crop. Exports of wheat are forecast to increase to 6 mmt, almost double
last year's, while exports of barley are forecast down by more than 1.1
mmt. Low rye production will result in increased imports. Tight balances
of both milling quality wheat and rye will result in continued increases
in bread and bread product prices. However, this increase will be slow
and in the absence of elections or other political events, will not
motivate the GOR to take action to control prices.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Moscow \[RS1\]

\[RS\]

Table of Contents

[Production 3](#production)

[Table 1. Grain Production by Types of Grain, CY 2002 -- 2004
3](#table-1.-grain-production-by-types-of-grain-cy-2002-2004)

[Trade 3](#trade)

[Stocks 4](#stocks)

[Policy 4](#policy)

[Crop Items Production, Supply and Demand Estimates
5](#crop-items-production-supply-and-demand-estimates)

[Table 2. PSD, Wheat, 1,000 Metric Tons, 1,000 Hectares
5](#table-2.-psd-wheat-1000-metric-tons-1000-hectares)

[Table 3. PSD, Barley, 1,000 Metric Tons, 1,000 Hectares
5](#table-3.-psd-barley-1000-metric-tons-1000-hectares)

[Table 4. PSD, Rye, 1,000 Metric Tons, 1,000 Hectares
6](#table-4.-psd-rye-1000-metric-tons-1000-hectares)

[Table 5. PSD, Corn, 1,000 Metric Tons, 1,000 Hectares
6](#table-5.-psd-corn-1000-metric-tons-1000-hectares)

# Production

According to the latest official Rosstat data, Russia produced 78 mmt of
grain in MY 2004, 16 percent more than last year. The reported bunker
weight of the crop reached 84.2 mmt, meaning only 7.4 percent was lost.
The total harvested area increased by 3.8 percent, while the average
yield increase by 5.5 percent. However, this is not the result of new
technologies or production practices, but rather the result of favorable
weather. Production of wheat increased by 33 percent, while production
of the other major grains (barley, rye, and oats) decreased by 8.4
percent. Production of rye, the second most important food crop, was at
a record low -- 2.7 mmt, a 31 percent decrease from last year. Corn was
an exception in 2004. Production increased by 63 percent due both to
higher yields and a larger sown area in the Southern Federal District,
the only place in Russia where climatic conditions are good enough for
commercial production.

## Table 1. Grain Production by Types of Grain, CY 2002 -- 2004

  ---------------- ----------- --------- ------------ --------------------
                   2002        2003      2004         2003 to 2004,
                                         (prelim.)    percent

  Wheat            50,609      34,062    45,306       33.01

  Barley           18,738      17,968    17,200       -4.27

  Rye              7,127       4,155     2,869        -30.95

  Oats             5,694       5,175     4,948        -4.39

  Millet           293         975       1,122        15.08

  Buckwheat        302         525       650          23.81

  Corn             1,563       2,113     3,458        63.65

  Rice             490         450       465          3.33

  Legumes          1,768       1,649     1,874        13.64

  Other            28          127       137          
  (difference)                                        

  TOTAL            86,612      67,199    78,029       16.12
  ---------------- ----------- --------- ------------ --------------------

Source: Rossstat data.

The area sown to winter crops, according to the Ministry of Agriculture
(MinAg), was 14.4 million hectares, almost 1.5 million hectares more
than last year. However, it is still early and weather could make a
significant difference. Even at this point some meteorologists caution
that unusually warm weather in the European part of the country may
result in a decrease in the winter survival of grain covered by ice.

# Trade

The import estimate for MY 2004 is almost 500,000 metric tons higher
than the previous year due to increased imports of food quality wheat
from Kazakhstan and at least 200,000 metric tons of rye despite almost
100,000 metric tons less of corn. During the period July through October
2004, Russia imported 510,000 metric tons of wheat and flour (in grain
equivalent), 115,000 metric tons of barley from Denmark, Kazakhstan and
Sweden, and almost 50,000 metric tons of rye from Germany and Ukraine
(SovEcon data).

Total exports in MY 2004 are estimated at 7.26 mmt, a 13 percent
increase from last year, including 6 mmt of wheat and 1.2 mmt of barley.
Exports in the period July through December 2004 consisted mostly of
wheat, 5.1 mmt in grain equivalent. Exports of barley in this period
reached 510,000 metric tons, significantly less than in the same period
last year. Trade normally slows down in December due to weather related
problems at major shipping points and will be fairly light until the new
crop is available.

# Stocks

Stocks in 2004 are estimated at 9.3 mmt, more than 3.3 mmt higher than
last year. However, this estimate could decrease if wheat exports
accelerate over the next few months.

# Policy

The most important recent grain policy initiative was the liquidation of
the State Grain Inspection Service and the upcoming transition of all
quality control functions of this organization to other agencies (See
GAIN RS4066). If the transitional period lasts longer than expected,
traders predict a significant increase in the number of court preceding
connected with disputes over quality assessments and a slow down in
transparent grain trade.

Another important policy factor will be grain interventions, which were
supposed to have been held in September or October 2004, but were not.
The main reason for the delay is the stability of grain prices and a
holdup in the adoption of the necessary GOR resolutions (See GAIN 5003).
However, the Minister of Agriculture said recently that in 2005, about
six million rubles will be available for interventions.

# Crop Items Production, Supply and Demand Estimates

## Table 2. PSD, Wheat, 1,000 Metric Tons, 1,000 Hectares

  --------------------- -------------- ---------- ---------- ---------- ---------- ----------
  **PSD Table**                                                                    

  **Country**           **Russian                                                  
                        Federation**                                               

  **Commodity**         **Wheat**                                       (1000      
                                                                        HA)(1000   
                                                                        MT)        

                        2002           Revised    2003       Estimate   2004       Forecast

                        USDA Official  Post       USDA       Post       USDA       Post
                        \[Old\]        Estimate   Official   Estimate   Official   Estimate
                                       \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year Begin**                07/2002               07/2003               07/2004

  Area Harvested        25700          25700      22150      22150      24100      24200

  Beginning Stocks      6479           6479       6133       6133       2619       2619

  Production            50550          50550      34100      34100      44500      45300

  TOTAL Mkt. Yr.        1045           1045       1000       1000       1500       1500
  Imports                                                                          

  Jul-Jun Imports       1045           365        1000       1000       1500       1500

  Jul-Jun Import U.S.   0              0          14         0          0          0

  TOTAL SUPPLY          58074          58074      41233      41233      48619      49419

  TOTAL Mkt. Yr.        12621          12621      3114       3114       6000       6000
  Exports                                                                          

  Jul-Jun Exports       12621          12621      3114       3114       6000       6000

  Feed Dom. Consumption 16000          16000      12500      12500      13500      13900

  TOTAL Dom.            39320          39320      35500      35500      37500      37950
  Consumption                                                                      

  Ending Stocks         6133           6133       2619       2619       5119       5469

  TOTAL DISTRIBUTION    58074          58074      41233      41233      48619      49419
  --------------------- -------------- ---------- ---------- ---------- ---------- ----------

## Table 3. PSD, Barley, 1,000 Metric Tons, 1,000 Hectares

+--------------------+-------+-------+-------+-------+-------+--------+
| ###### PSD Table   |       |       |       |       |       |        |
+--------------------+-------+-------+-------+-------+-------+--------+
| **Country**        | **Ru  |       |       |       |       |        |
|                    | ssian |       |       |       |       |        |
|                    | Fe    |       |       |       |       |        |
|                    | derat |       |       |       |       |        |
|                    | ion** |       |       |       |       |        |
+--------------------+-------+-------+-------+-------+-------+--------+
| **Commodity**      | **Bar |       |       |       | (1000 |        |
|                    | ley** |       |       |       | HA)   |        |
|                    |       |       |       |       | (1000 |        |
|                    |       |       |       |       | MT)   |        |
+--------------------+-------+-------+-------+-------+-------+--------+
|                    | 2002  | Re    | 2003  | Est   | 2004  | Fo     |
|                    |       | vised |       | imate |       | recast |
+--------------------+-------+-------+-------+-------+-------+--------+
|                    | USDA  | Post  | USDA  | Post  | USDA  | Post   |
|                    | Off   | Est   | Off   | Est   | Off   | Es     |
|                    | icial | imate | icial | imate | icial | timate |
|                    | \[    | \[    | \[    | \[    | \[    | \      |
|                    | Old\] | New\] | Old\] | New\] | Old\] | [New\] |
+--------------------+-------+-------+-------+-------+-------+--------+
| #######            |       | 07    |       | 07    |       | 0      |
|  Market Year Begin |       | /2002 |       | /2003 |       | 7/2004 |
+--------------------+-------+-------+-------+-------+-------+--------+
| Area Harvested     | 10250 | 10250 | 10100 | 10500 | 10000 | 10000  |
+--------------------+-------+-------+-------+-------+-------+--------+
| Beginning Stocks   | 4387  | 4387  | 4706  | 4706  | 2188  | 2188   |
+--------------------+-------+-------+-------+-------+-------+--------+
| Production         | 18700 | 18700 | 18000 | 18000 | 17500 | 17200  |
+--------------------+-------+-------+-------+-------+-------+--------+
| TOTAL Mkt. Yr.     | 251   | 251   | 400   | 400   | 300   | 300    |
| Imports            |       |       |       |       |       |        |
+--------------------+-------+-------+-------+-------+-------+--------+
| Oct-Sep Imports    | 275   | 275   | 400   | 400   | 300   | 300    |
+--------------------+-------+-------+-------+-------+-------+--------+
| Oct-Sep Import     | 0     | 0     | 0     | 0     | 0     | 0      |
| U.S.               |       |       |       |       |       |        |
+--------------------+-------+-------+-------+-------+-------+--------+
| TOTAL SUPPLY       | 23338 | 23338 | 23106 | 23106 | 19988 | 19688  |
+--------------------+-------+-------+-------+-------+-------+--------+
| TOTAL Mkt. Yr.     | 3132  | 3132  | 2318  | 2318  | 1700  | 1200   |
| Exports            |       |       |       |       |       |        |
+--------------------+-------+-------+-------+-------+-------+--------+
| Oct-Sep Exports    | 3066  | 3066  | 1800  | 1800  | 1700  | 1200   |
+--------------------+-------+-------+-------+-------+-------+--------+
| Feed Dom.          | 10700 | 10700 | 13700 | 13700 | 11300 | 11700  |
| Consumption        |       |       |       |       |       |        |
+--------------------+-------+-------+-------+-------+-------+--------+
| TOTAL Dom.         | 15500 | 15500 | 18600 | 18600 | 16300 | 16500  |
| Consumption        |       |       |       |       |       |        |
+--------------------+-------+-------+-------+-------+-------+--------+
| Ending Stocks      | 4706  | 4706  | 2188  | 2188  | 1988  | 1988   |
+--------------------+-------+-------+-------+-------+-------+--------+
| TOTAL DISTRIBUTION | 23338 | 23338 | 23106 | 23106 | 19988 | 19688  |
+--------------------+-------+-------+-------+-------+-------+--------+

## Table 4. PSD, Rye, 1,000 Metric Tons, 1,000 Hectares

  --------------------- -------------- ---------- ---------- ---------- ---------- ----------
  **PSD Table**                                                                    

  **Country**           **Russian                                                  
                        Federation**                                               

  **Commodity**         **Rye**                                         (1000      
                                                                        HA)(1000   
                                                                        MT)        

                        2002           Revised    2003       Estimate   2004       Forecast

                        USDA Official  Post       USDA       Post       USDA       Post
                        \[Old\]        Estimate   Official   Estimate   Official   Estimate
                                       \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year Begin**                07/2002               07/2003               07/2004

  Area Harvested        3750           3750       2350       2350       2000       2000

  Beginning Stocks      1096           1096       1805       1805       349        349

  Production            7150           7150       4200       4200       3300       2870

  TOTAL Mkt. Yr.        0              0          0          0          100        200
  Imports                                                                          

  Oct-Sep Imports       0              0          0          0          100        200

  Oct-Sep Import U.S.   0              0          0          0          0          0

  TOTAL SUPPLY          8246           8246       6005       6005       3749       3419

  TOTAL Mkt. Yr.        291            291        156        156        0          0
  Exports                                                                          

  Oct-Sep Exports       414            414        50         50         5          5

  Feed Dom. Consumption 1750           1750       1100       1100       300        300

  TOTAL Dom.            6150           6150       5500       5500       3500       3200
  Consumption                                                                      

  Ending Stocks         1805           1805       349        349        249        219

  TOTAL DISTRIBUTION    8246           8246       6005       6005       3749       3419
  --------------------- -------------- ---------- ---------- ---------- ---------- ----------

## Table 5. PSD, Corn, 1,000 Metric Tons, 1,000 Hectares

  --------------------- -------------- ---------- ---------- ---------- ---------- ----------
  **PSD Table**                                                                    

  **Country**           **Russian                                                  
                        Federation**                                               

  **Commodity**         **Corn**                                        (1000      
                                                                        HA)(1000   
                                                                        MT)        

                        2002           Revised    2003       Estimate   2004       Forecast

                        USDA Official  Post       USDA       Post       USDA       Post
                        \[Old\]        Estimate   Official   Estimate   Official   Estimate
                                       \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year Begin**                10/2002               10/2003               10/2004

  Area Harvested        550            544        700        700        700        700

  Beginning Stocks      76             76         113        113        163        163

  Production            1550           1550       2100       2115       3000       3450

  TOTAL Mkt. Yr.        99             99         500        500        600        400
  Imports                                                                          

  Oct-Sep Imports       99             99         500        500        600        400

  Oct-Sep Import U.S.   0              0          60         0          0          0

  TOTAL SUPPLY          1725           1725       2713       2728       3763       4013

  TOTAL Mkt. Yr.        12             12         0          0          0          0
  Exports                                                                          

  Oct-Sep Exports       12             12         0          0          0          0

  Feed Dom. Consumption 1200           1200       2150       2150       2800       3100

  TOTAL Dom.            1600           1600       2550       2565       3400       3650
  Consumption                                                                      

  Ending Stocks         113            113        163        163        363        363

  TOTAL DISTRIBUTION    1725           1725       2713       2728       3763       4013
  --------------------- -------------- ---------- ---------- ---------- ---------- ----------

#