Required Report - public distribution

**Date:** 10/3/2005

**GAIN Report Number:** RS5070

RS5070

**Russian Federation**

**Grain and Feed**

**October Monthly Update**

**2005**

**Approved by:**

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

American Embassy, Moscow

**Prepared by:**

Yelena Vassilieva, Kimberly Svec

**Report Highlights:**

Russian total grain output is estimated at 77.3 million metric tons
(mmt), including 47.5 mmt of wheat and 16.3 mmt of barley. Exports
slowed in September because of domestic and international price
uncertainty, but Russia exported an historic high amount of grain in
July and August of 2.6 mmt, including 2.1 mmt of wheat. Grain
interventions are underway, but procurements are not big, as farmers are
waiting for better market prices. High fuel prices and dry weather made
winter grain sowing conditions worse than last year.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Moscow \[RS1\]

\[RS\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Harvest Progress 3](#harvest-progress)

[Winter Sowing 3](#winter-sowing)

[Trade 4](#trade)

[Policy and Marketing 4](#policy-and-marketing)

[PSD Tables 5](#psd-tables)

[Wheat 5](#wheat)

[Barley 6](#barley)

[Corn 6](#corn)

# Executive Summary

Russia's total grain production estimate is 77.3 million metric tons.
Wheat production is estimated at 47.5 mmt, and barley at 16.3 mmt.
According to experts, grain exports in July -- August reached 2.6 mmt,
including 2.1 mmt of wheat and almost 0.5 mmt of barley. In September,
exports slowed down due to price and market uncertainty. The total grain
export forecast is 11.15 mmt, including 10.0 mmt of wheat. Grain
interventions are underway, but procurements are not big, farmers are
waiting for better market prices, and their hesitation is stimulated by
still-absent grain quality certificates that are required by law for
final registration of purchases. The rise in fuel prices and dry
September weather in most of grain producing regions of Russia have
created worse conditions than during the last two years for winter grain
sowing.

# Production

The total grain production forecast is 77.3 mmt clean weight, including
47.5 mmt of wheat and 16.3 mmt of barley. Growing conditions for corn
are very favorable this year, and experts estimate that area sown to
corn in the Southern Federal District and in the south of Central
Federal District are bigger than last year. Thus, the corn production
forecast is raised to 3.1 mmt, closer to last year's record level of
production.

## Harvest Progress

The Russian Ministry of Agriculture reported that as of September 26,
farmers harvested 78.3 mmt of grain, bunker weight basis, (Table 1),
including 46.0 mmt of wheat. The MinAg reported that out of 44.4 million
hectares previously estimated as the harvested area, only 43.3 million
hectares will actually be harvested. The remaining 1.1 million hectares
were either damaged or used as pastures. Last year the grain harvest
area was 41.5 million hectares. However, according to the Ministry of
Agriculture, the country's average grain yield will be lower this year
than last year, and total grain output will not be higher than last
year.

  ------------------------------ ---------------------- ------------------
                                 Share of Actually      Harvested Crop
                                 Harvested Area,        (bunker weight),
                                 Percent                1.0 Million MT

  Russia, Total                  90                     78.3

  Including:                                            

  Central Federal District       97                     15.9

  Southern Federal District      92                     25.5

  Volga Valley Federal District  98                     20.9

  Ural Federal District          82.5                   4.4

  Siberian Federal District      77                     10.6
  ------------------------------ ---------------------- ------------------

Source: Russian Ministry of Agriculture

The Ministry of Agriculture reports that 700,000 metric tons of corn for
grain have been harvested on 153,000 hectares, or 17.5 percent of
expected corn for grain harvested area. Yields of corn are higher this
year than last year. Experts forecast that corn production may reach
last year's record level. However, corn harvesting is still just
beginning, and a lot will depend on weather in October.

## Winter Sowing

According to the Ministry of Agriculture, winter grain sowing is lagging
behind last year because of dry weather and low soil moisture in
Southern Russia. By September 26, area sown to winter crops was 0.7
million hectares less than last year on the same date. Late sowing and
increased fuel prices may have a negative effect on next year's crop.
However, the threat of decreased crop in 2006 may stimulate farmers to
save more grain on farm, and may finally lead to lower offer of grain in
the fall 2005. Increased fuel prices, along with stagnant or decreasing
grain prices, deprive farmers of incentives to harvest grain when
expected yields do not cover expenses. This factor may result in a
smaller grain crop than previously expected.

# Trade

The total grain export forecast is raised to 11.15 mmt, including 10.0
mmt of wheat. Attractive international barley prices may stimulate
exports of barley from Russia, and in spite of one of the smallest
barley crops in recent history, Russian grain traders may export up to
1.0 mmt of barley in the coming year. Some exports of corn and rye to
CIS countries will make up the difference.

According to experts, actual exports of grain in July-August 2005
reached 2.6 mmt, including 2.1 mmt of wheat and 0.47 mmt of barley.

Imports of grain other than rice are low, and had not yet reached
100,000 metric tons in July - August 2005. Imports of rice continue at
almost the same pace as last year, and in January -- July 2005 amounted
to 545,000 metric tons.

# Policy and Marketing

The Russian Government started grain procurement interventions in the
end of August, and by the end of September had purchased 530,000 metric
tons of wheat for the intervention fund, spending for these purchases
slightly more than 1.0 billion rubles out of 6 billion rubles allocated
for grain interventions this marketing year.

In the middle of September, Minister of Agriculture Aleksey Gordeyev set
prices for class 4 wheat (milling/feed quality) at 2,450 Rubles (\$86)
per metric ton in European Russia, and 2,600 Rubles (\$91) per metric
ton in the Urals and Siberia. However, sales of class 4 wheat to the
intervention fund are very low.

The rye procurement price ceiling is set at 2,500 Rubles (\$88) per
metric ton.

According to experts, interventions play a greater role in curbing grain
prices from plummeting rather than actually withdrawing grain from the
market. Besides, registration of procured grain in the state reserve, as
well as actual payments to grain sellers for their grain, are
constrained by still-absent grain quality certificates and some other
documents of the Veterinary and Phytosanitary Surveillance Service
(VPSS). The VPSS now has authority to issue these certificates (see GAIN
Report RS5065 *Grain Certification News*), but has not developed the
format of these documents yet.

# PSD Tables

## Wheat

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

+------------------+------+------+--------+--------+--------+-------+
| **PSD Table**    |      |      |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| **Country**      | *    |      |        |        |        |       |
|                  | *Rus |      |        |        |        |       |
|                  | sian |      |        |        |        |       |
|                  | Fede |      |        |        |        |       |
|                  | rati |      |        |        |        |       |
|                  | on** |      |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| **Commodity**    | *    |      |        |        | (1000  |       |
|                  | *Whe |      |        |        | HA)    |       |
|                  | at** |      |        |        | (1000  |       |
|                  |      |      |        |        | MT)    |       |
+------------------+------+------+--------+--------+--------+-------+
|                  | 2003 | Rev  | 2004   | Es     | 2005   | For   |
|                  |      | ised |        | timate |        | ecast |
+------------------+------+------+--------+--------+--------+-------+
|                  | USDA | Post | USDA   | Post   | USDA   | Post  |
|                  | Offi |      | Of     | Es     |        | Est   |
|                  | cial | Esti | ficial | timate | Of     | imate |
|                  | \[O  | mate | \      |        | ficial |       |
|                  | ld\] |      | [Old\] | \      |        | \[    |
|                  |      | \[N  |        | [New\] | \      | New\] |
|                  |      | ew\] |        |        | [Old\] |       |
+------------------+------+------+--------+--------+--------+-------+
| **Market Year    |      | 07/  |        | 0      |        | 07    |
| Begin**          |      | 2003 |        | 7/2004 |        | /2005 |
+------------------+------+------+--------+--------+--------+-------+
| Area Harvested   | 2    | 2    | 24200  | 24200  | 25500  | 25500 |
|                  | 2150 | 2150 |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| Beginning Stocks | 6133 | 6133 | 2645   | 2645   | 3794   | 3775  |
+------------------+------+------+--------+--------+--------+-------+
| Production       | 3    | 3    | 45300  | 45300  | 48500  | 47500 |
|                  | 4100 | 4100 |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| TOTAL Mkt. Yr.   | 1026 | 1026 | 1200   | 1150   | 1200   | 1200  |
| Imports          |      |      |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| Jul-Jun Imports  | 1026 | 1026 | 1200   | 1150   | 1200   | 1200  |
+------------------+------+------+--------+--------+--------+-------+
| Jul-Jun Import   | 14   | 14   | 0      | 0      | 0      | 0     |
| U.S.             |      |      |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| TOTAL SUPPLY     | 4    | 4    | 49145  | 49095  | 53494  | 52475 |
|                  | 1259 | 1259 |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| TOTAL Mkt. Yr.   | 3114 | 3114 | 7951   | 7920   | 10000  | 10000 |
| Exports          |      |      |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| Jul-Jun Exports  | 3114 | 3114 | 7951   | 7920   | 10000  | 10000 |
+------------------+------+------+--------+--------+--------+-------+
| Feed Dom.        | 1    | 1    | 13600  | 13600  | 15500  | 14500 |
| Consumption      | 2500 | 2500 |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| TOTAL Dom.       | 3    | 3    | 37400  | 37400  | 39000  | 38500 |
| Consumption      | 5500 | 5500 |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+
| Ending Stocks    | 2645 | 2645 | 3794   | 3775   | 4494   | 3975  |
+------------------+------+------+--------+--------+--------+-------+
| TOTAL            | 4    | 4    | 49145  | 49095  | 53494  | 52475 |
| DISTRIBUTION     | 1259 | 1259 |        |        |        |       |
+------------------+------+------+--------+--------+--------+-------+

## Barley

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)   |        |
+------------------+-------+------+--------+---------+-------+--------+
|                  | 2003  | Rev  | 2004   | E       | 2005  | Fo     |
|                  |       | ised |        | stimate |       | recast |
+------------------+-------+------+--------+---------+-------+--------+
|                  | USDA  | Post | USDA   | Post    | USDA  | Post   |
|                  | Off   |      |        | E       | Off   |        |
|                  | icial | Esti | Of     | stimate | icial | Es     |
|                  | \[    | mate | ficial |         | \[    | timate |
|                  | Old\] |      |        | \[New\] | Old\] |        |
|                  |       | \[N  | \      |         |       | \      |
|                  |       | ew\] | [Old\] |         |       | [New\] |
+------------------+-------+------+--------+---------+-------+--------+
| **Market Year    |       | 07/  |        | 07/2004 |       | 0      |
| Begin**          |       | 2003 |        |         |       | 7/2005 |
+------------------+-------+------+--------+---------+-------+--------+
| Area Harvested   | 10500 | 1    | 10000  | 10000   | 9300  | 9280   |
|                  |       | 0500 |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+
| Beginning Stocks | 4706  | 4706 | 2227   | 2227    | 2238  | 2243   |
+------------------+-------+------+--------+---------+-------+--------+
| Production       | 18000 | 1    | 17200  | 17200   | 16000 | 16300  |
|                  |       | 8000 |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+
| TOTAL Mkt. Yr.   | 439   | 439  | 400    | 335     | 400   | 350    |
| Imports          |       |      |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+
| Oct-Sep Imports  | 438   | 475  | 400    | 335     | 400   | 350    |
+------------------+-------+------+--------+---------+-------+--------+
| Oct-Sep Import   | 0     | 0    | 0      | 0       | 0     | 0      |
| U.S.             |       |      |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+
| TOTAL SUPPLY     | 23145 | 2    | 19827  | 19762   | 18638 | 18893  |
|                  |       | 3145 |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+
| TOTAL Mkt. Yr.   | 2318  | 2318 | 1089   | 1089    | 800   | 1000   |
| Exports          |       |      |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+
| Oct-Sep Exports  | 1736  | 1736 | 1000   | 1000    | 800   | 1000   |
+------------------+-------+------+--------+---------+-------+--------+
| Feed Dom.        | 13700 | 1    | 11700  | 11630   | 11500 | 11600  |
| Consumption      |       | 3700 |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+
| TOTAL Dom.       | 18600 | 1    | 16500  | 16430   | 16300 | 16400  |
| Consumption      |       | 8600 |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+
| Ending Stocks    | 2227  | 2227 | 2238   | 2243    | 1538  | 1493   |
+------------------+-------+------+--------+---------+-------+--------+
| TOTAL            | 23145 | 2    | 19827  | 19762   | 18638 | 18893  |
| DISTRIBUTION     |       | 3145 |        |         |       |        |
+------------------+-------+------+--------+---------+-------+--------+

## Corn

Table 4. PSD, Corn, 1,000 Metric Tons, 1,000 Hectares

+------------------+-------+---------+-------+------+-------+--------+
| **PSD Table**    |       |         |       |      |       |        |
+------------------+-------+---------+-------+------+-------+--------+
| ###### Coun      | **Ru  |         |       |      |       |        |
| try {#country-1} | ssian |         |       |      |       |        |
|                  | Fe    |         |       |      |       |        |
|                  | derat |         |       |      |       |        |
|                  | ion** |         |       |      |       |        |
+------------------+-------+---------+-------+------+-------+--------+
| **Commodity**    | **C   |         |       |      | (1000 |        |
|                  | orn** |         |       |      | HA)   |        |
|                  |       |         |       |      | (1000 |        |
|                  |       |         |       |      | MT)   |        |
+------------------+-------+---------+-------+------+-------+--------+
|                  | 2003  | Revised | 2004  | Esti | 2005  | Fo     |
|                  |       |         |       | mate |       | recast |
+------------------+-------+---------+-------+------+-------+--------+
|                  | USDA  | Post    | USDA  | Post | USDA  | Post   |
|                  | Off   | E       | Off   | Esti |       |        |
|                  | icial | stimate | icial | mate | Off   | Es     |
|                  | \[    |         | \[    |      | icial | timate |
|                  | Old\] | \[New\] | Old\] | \[N  |       |        |
|                  |       |         |       | ew\] | \[    | \      |
|                  |       |         |       |      | Old\] | [New\] |
+------------------+-------+---------+-------+------+-------+--------+
| **Market Year    |       | 10/2003 |       | 10/  |       | 1      |
| Begin**          |       |         |       | 2004 |       | 0/2005 |
+------------------+-------+---------+-------+------+-------+--------+
| Area Harvested   | 700   | 700     | 900   | 900  | 800   | 950    |
+------------------+-------+---------+-------+------+-------+--------+
| Beginning Stocks | 113   | 113     | 159   | 159  | 259   | 259    |
+------------------+-------+---------+-------+------+-------+--------+
| Production       | 2100  | 2100    | 3450  | 3450 | 2500  | 3100   |
+------------------+-------+---------+-------+------+-------+--------+
| TOTAL Mkt. Yr.   | 496   | 496     | 200   | 300  | 200   | 350    |
| Imports          |       |         |       |      |       |        |
+------------------+-------+---------+-------+------+-------+--------+
| Oct-Sep Imports  | 496   | 496     | 200   | 300  | 200   | 350    |
+------------------+-------+---------+-------+------+-------+--------+
| Oct-Sep Import   | 70    | 60      | 0     | 0    | 0     | 0      |
| U.S.             |       |         |       |      |       |        |
+------------------+-------+---------+-------+------+-------+--------+
| TOTAL SUPPLY     | 2709  | 2709    | 3809  | 3909 | 2959  | 3709   |
+------------------+-------+---------+-------+------+-------+--------+
| TOTAL Mkt. Yr.   | 0     | 0       | 0     | 50   | 0     | 50     |
| Exports          |       |         |       |      |       |        |
+------------------+-------+---------+-------+------+-------+--------+
| Oct-Sep Exports  | 0     | 0       | 0     | 50   | 0     | 50     |
+------------------+-------+---------+-------+------+-------+--------+
| Feed Dom.        | 2150  | 2150    | 3000  | 3000 | 2100  | 2900   |
| Consumption      |       |         |       |      |       |        |
+------------------+-------+---------+-------+------+-------+--------+
| TOTAL Dom.       | 2550  | 2550    | 3550  | 3600 | 2600  | 3450   |
| Consumption      |       |         |       |      |       |        |
+------------------+-------+---------+-------+------+-------+--------+
| Ending Stocks    | 159   | 159     | 259   | 259  | 359   | 209    |
+------------------+-------+---------+-------+------+-------+--------+
| TOTAL            | 2709  | 2709    | 3809  | 3909 | 2959  | 3709   |
| DISTRIBUTION     |       |         |       |      |       |        |
+------------------+-------+---------+-------+------+-------+--------+