Voluntary Report - public distribution

**Date:** 8/10/2004

**GAIN Report Number:** RS4041

RS4041

**Russian Federation**

**Grain and Feed**

**August 2004 Monthly Update**

**2004**

**Approved by:**

![](media/image1.wmf)Randall Hager

U.S. Embassy

**Prepared by:**

Yelena Vassilieva and Dorothy Adams

**Report Highlights:**

Russia's total grain crop is forecast at 75 million metric tons (mmt),
due primarily to high yields in the Southern Federal District. Exports,
comprised mostly of wheat, are forecast to increase to seven mmt. Prices
are being pushed downward by a relatively large crop in European Russia
and by early season sales or \"gray\" sales by farmers who need the
revenue. Statements made earlier this year by the Ministry of
Agriculture concerning market interventions to protect grain prices from
plummeting have not yet been enacted.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Moscow \[RS1\]

\[RS\]

Table of Contents

[Production 3](#production)

[Trade 3](#trade)

[Policy 4](#policy)

[Grain Interventions 4](#grain-interventions)

[Wheat 4](#wheat)

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

[Barley 5](#barley)

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

[Corn 6](#corn)

[Table 3. PSD, Corn, 1,000 Metric Tons, 1,000 Hectares
6](#table-3.-psd-corn-1000-metric-tons-1000-hectares)

# Production

Russia's total grain crop is estimated at 75 mmt, with wheat making up
over 57 percent of the total. The officially reported bunker weight may
exceed 82 mmt, but due to rainy weather in the southern and central
parts of the country, the gap between the bunker and final clean weight
may be larger then seven mmt.

According to the latest (July 27) official data on harvesting (all
production data is given in bunker weight), over 14.33 mmt of grain (84
percent more than on the same date last year) has been harvested from
4.2 million hectares. Wheat constituted 11.2 mmt or 78 percent of the
total. Less rain at the end of July and the beginning of August
permitted farmers in the southern part of the country to complete
harvesting with rather good results by August 4th. According to data
from the regions, Stavropol kray harvested over 5.5 mmt of grain and
Rostov oblast harvested almost six mmt from 80 percent of the total
planted area. The total crop in Krasnodar kray reached 6.2 mmt from 1.4
million hectares (92 percent of planted area), winter wheat production
exceeded 4.42 mmt from a harvested area of 960,800 hectares (94 percent
of the total planted area), with yields of 4.6 tons per hectare. Spring
barley was harvested from 107,500 hectares (91 percent of the total
planted area) and the average yield reached nearly 2.5 tons per hectare.
The bunker weight in these three regions was almost 18 mmt. Crop
prospects in other oblasts of the Southern Federal District, the Central
Federal District, and in the Volga Valley Federal District, also look
promising. Due to hot weather in the Urals, the crop in this region is
expected to be lower than last year. The crop in Siberia is estimated to
be average.

Based on the results of the wheat crop inspection by the State Grain
Inspection Service in Stavropol kray, Krasnodar kray, and Rostov oblast,
the share of milling quality wheat is lower than last year, but the
volume is higher. However, the volume of the best quality wheat (so
called "strong" and "precious" grades, with protein over 23 percent and
excellent characteristics for making dough) is lower than last year as
heavy rains washed out protein during wheat ripening.

# Trade

Despite decreasing world wheat and barley prices and strengthening
competition due to good crops in Europe, Kazakhstan, and the Ukraine,
Russia may export more than seven mmt in MY 2004. Some traders expect a
shortage of boats this year in the Don River/Azov Sea region, an
indicator of a very active export season.

Official data for exports in June or July is not yet available, but
reports from various regions indicate traders were very active in
purchasing the local crop and searching for export markets. A good crop
in European Russia combined with a shortage of on-farm elevators and
some farmers in desperate need of financing will initiate "gray" sales
to middlemen and traders at prices as low as 1,500 R - 2,000 R
(\$52-\$69) per metric ton. The "gray" market this year is forecast to
be significant despite attempts by local administrations to reign in
this market. For example, the Penza Oblast administration decided to
create a special commission at the local level for "controlling
harvesting" to combat those farmers who underreport yields. Lowering
yields is one of the methods farmers use to hide some of their crop for
"gray" sales.

# Policy

## Grain Interventions

Rumors have been circulating that the Government of Russia would
announce starting prices for grain market interventions by the beginning
of August. However, no resolutions have been published and as the final
size of the crop, the final distribution of grain between regions, and
the approximate prices of milling quality wheat are unclear, the
decision-making process is likely to be slow.

# Wheat

Based on a large crop in the European part of the country, production is
forecast to increase to 43.1 mmt in MY 2004. Imports are forecast to
increase to 1.5 mmt due to the intensification of imports from
Kazakhstan to the Urals and Siberia, supported by the search for
additional markets by some large Kazakh companies. More wheat from the
European part of the country will be exported and total trade will
exceed the level of MY 2003 and reach five mmt. Domestic feed
consumption will also increase to 14 mmt.

The wheat export estimate for MY 2003 is raised to four mmt based on the
latest data for wheat and wheat flour (in grain equivalent) during the
period from July, 2003 to May, 2004

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

+----------------------+-------+------+------+------+------+-------+
| ######## PSD Table   |       |      |      |      |      |       |
+----------------------+-------+------+------+------+------+-------+
| **Country**          | **Ru  |      |      |      |      |       |
|                      | ssian |      |      |      |      |       |
|                      | Fe    |      |      |      |      |       |
|                      | derat |      |      |      |      |       |
|                      | ion** |      |      |      |      |       |
+----------------------+-------+------+------+------+------+-------+
| **Commodity**        | **Wh  |      |      | (    |      |       |
|                      | eat** |      |      | 1000 |      |       |
|                      |       |      |      | HA)( |      |       |
|                      |       |      |      | 1000 |      |       |
|                      |       |      |      | MT)  |      |       |
+----------------------+-------+------+------+------+------+-------+
|                      | 2002  | Rev  | 2003 | Esti | 2004 | For   |
|                      |       | ised |      | mate |      | ecast |
+----------------------+-------+------+------+------+------+-------+
|                      | USDA  | Post | USDA | Post | USDA | Post  |
|                      | Off   | Esti | Offi | Esti | Offi | Est   |
|                      | icial | mate | cial | mate | cial | imate |
|                      | \[    | \[N  | \[O  | \[N  | \[O  | \[    |
|                      | Old\] | ew\] | ld\] | ew\] | ld\] | New\] |
+----------------------+-------+------+------+------+------+-------+
| **Market Year        |       | 07/  |      | 07/  |      | 07    |
| Begin**              |       | 2002 |      | 2003 |      | /2004 |
+----------------------+-------+------+------+------+------+-------+
| Area Harvested       | 25700 | 2    | 2    | 2    | 2    | 23000 |
|                      |       | 5700 | 2150 | 1500 | 4200 |       |
+----------------------+-------+------+------+------+------+-------+
| Beginning Stocks     | 6479  | 6479 | 6133 | 5633 | 2233 | 1633  |
+----------------------+-------+------+------+------+------+-------+
| Production           | 50550 | 5    | 3    | 3    | 4    | 43100 |
|                      |       | 0550 | 4100 | 4030 | 2500 |       |
+----------------------+-------+------+------+------+------+-------+
| TOTAL Mkt. Yr.       | 1045  | 365  | 1000 | 1000 | 1000 | 1500  |
| Imports              |       |      |      |      |      |       |
+----------------------+-------+------+------+------+------+-------+
| Jul-Jun Imports      | 1045  | 365  | 1000 | 1000 | 1000 | 1500  |
+----------------------+-------+------+------+------+------+-------+
| Jul-Jun Import U.S.  | 0     | 0    | 0    | 0    | 0    | 0     |
+----------------------+-------+------+------+------+------+-------+
| TOTAL SUPPLY         | 58074 | 5    | 4    | 4    | 4    | 46233 |
|                      |       | 7394 | 1233 | 0663 | 5733 |       |
+----------------------+-------+------+------+------+------+-------+
| TOTAL Mkt. Yr.       | 12621 | 1    | 3500 | 4000 | 4500 | 5000  |
| Exports              |       | 2621 |      |      |      |       |
+----------------------+-------+------+------+------+------+-------+
| Jul-Jun Exports      | 12621 | 1    | 3500 | 3900 | 4500 | 5000  |
|                      |       | 2621 |      |      |      |       |
+----------------------+-------+------+------+------+------+-------+
| Feed Dom.            | 16000 | 1    | 1    | 1    | 1    | 13000 |
| Consumption          |       | 4700 | 2500 | 1355 | 3000 |       |
+----------------------+-------+------+------+------+------+-------+
| TOTAL Dom.           | 39320 | 3    | 3    | 3    | 3    | 36600 |
| Consumption          |       | 9140 | 5500 | 5030 | 6500 |       |
+----------------------+-------+------+------+------+------+-------+
| Ending Stocks        | 6133  | 5633 | 2233 | 1633 | 4733 | 4633  |
+----------------------+-------+------+------+------+------+-------+
| TOTAL DISTRIBUTION   | 58074 | 5    | 4    | 4    | 4    | 46233 |
|                      |       | 7394 | 1233 | 0663 | 5733 |       |
+----------------------+-------+------+------+------+------+-------+

# Barley

The crop forecast for MY 2004 is 18.2 mmt, higher than last year, but
lower than in MY 2002. Because barley is a spring crop in Russia,
planting decisions are made by farmers in the European part of the
country at a time when barley prices are falling faster than wheat
prices. Therefore, farmers sometimes make production decisions in favor
of wheat over barley during this time and any increase in the barley
crop will be based exclusively on higher yields from a smaller harvested
area.

The import and export estimates in MY 2003 are raised to 400,000 metric
tons and 3.01 mmt respectably based on actual trade data for July, 2003
-- May, 2004.

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

+--------------------+------+-------+-------+-------+-------+------+
| ######## PSD Table |      |       |       |       |       |      |
+--------------------+------+-------+-------+-------+-------+------+
| **Country**        | *    |       |       |       |       |      |
|                    | *Rus |       |       |       |       |      |
|                    | sian |       |       |       |       |      |
|                    | Fede |       |       |       |       |      |
|                    | rati |       |       |       |       |      |
|                    | on** |       |       |       |       |      |
+--------------------+------+-------+-------+-------+-------+------+
| **Commodity**      | **   |       |       | (1000 |       |      |
|                    | Barl |       |       | HA)   |       |      |
|                    | ey** |       |       | (1000 |       |      |
|                    |      |       |       | MT)   |       |      |
+--------------------+------+-------+-------+-------+-------+------+
|                    | 2002 | Re    | 2003  | Est   | 2004  | Fore |
|                    |      | vised |       | imate |       | cast |
+--------------------+------+-------+-------+-------+-------+------+
|                    | USDA | Post  | USDA  | Post  | USDA  | Post |
|                    | Offi | Est   | Off   | Est   | Off   | Esti |
|                    | cial | imate | icial | imate | icial | mate |
|                    | \[O  | \[    | \[    | \[    | \[    | \[N  |
|                    | ld\] | New\] | Old\] | New\] | Old\] | ew\] |
+--------------------+------+-------+-------+-------+-------+------+
| **Market Year      |      | 07    |       | 07    |       | 07/  |
| Begin**            |      | /2002 |       | /2003 |       | 2004 |
+--------------------+------+-------+-------+-------+-------+------+
| Area Harvested     | 1    | 10250 | 10100 | 10500 | 10600 | 1    |
|                    | 0250 |       |       |       |       | 0500 |
+--------------------+------+-------+-------+-------+-------+------+
| Beginning Stocks   | 4387 | 4387  | 4706  | 4706  | 1806  | 1606 |
+--------------------+------+-------+-------+-------+-------+------+
| Production         | 1    | 18700 | 18000 | 17946 | 18500 | 1    |
|                    | 8700 |       |       |       |       | 8200 |
+--------------------+------+-------+-------+-------+-------+------+
| TOTAL Mkt. Yr.     | 251  | 251   | 300   | 400   | 300   | 300  |
| Imports            |      |       |       |       |       |      |
+--------------------+------+-------+-------+-------+-------+------+
| Oct-Sep Imports    | 275  | 275   | 300   | 400   | 300   | 300  |
+--------------------+------+-------+-------+-------+-------+------+
| Oct-Sep Import     | 0    | 0     | 0     | 0     | 0     | 0    |
| U.S.               |      |       |       |       |       |      |
+--------------------+------+-------+-------+-------+-------+------+
| TOTAL SUPPLY       | 2    | 23338 | 23006 | 23052 | 20606 | 2    |
|                    | 3338 |       |       |       |       | 0106 |
+--------------------+------+-------+-------+-------+-------+------+
| TOTAL Mkt. Yr.     | 3132 | 3132  | 2600  | 3010  | 2000  | 2000 |
| Exports            |      |       |       |       |       |      |
+--------------------+------+-------+-------+-------+-------+------+
| Oct-Sep Exports    | 3066 | 3066  | 2800  | 3010  | 2000  | 2000 |
+--------------------+------+-------+-------+-------+-------+------+
| Feed Dom.          | 1    | 10700 | 13700 | 13700 | 11600 | 1    |
| Consumption        | 0700 |       |       |       |       | 1700 |
+--------------------+------+-------+-------+-------+-------+------+
| TOTAL Dom.         | 1    | 15500 | 18600 | 18436 | 16600 | 1    |
| Consumption        | 5500 |       |       |       |       | 6300 |
+--------------------+------+-------+-------+-------+-------+------+
| Ending Stocks      | 4706 | 4706  | 1806  | 1606  | 2006  | 1806 |
+--------------------+------+-------+-------+-------+-------+------+
| TOTAL DISTRIBUTION | 2    | 23338 | 23006 | 23052 | 20606 | 2    |
|                    | 3338 |       |       |       |       | 0106 |
+--------------------+------+-------+-------+-------+-------+------+

# Corn

The production forecast for MY 2004 is unchanged, but imports are
forecast to increase to 600,000 metric tons. Imports from the Ukraine
should drop because even though the corn crop is forecast to be large,
Ukrainian grain companies may be more interested in exporting more feed
wheat and compensating local demand from the poultry industry with corn.

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

+---------------------+------+-------+------+-------+------+-------+
| ####### C           | *    |       |      |       |      |       |
| ountry {#country-1} | *Rus |       |      |       |      |       |
|                     | sian |       |      |       |      |       |
|                     | Fede |       |      |       |      |       |
|                     | rati |       |      |       |      |       |
|                     | on** |       |      |       |      |       |
+---------------------+------+-------+------+-------+------+-------+
| **Commodity**       | **Co |       |      | (1000 |      |       |
|                     | rn** |       |      | HA)   |      |       |
|                     |      |       |      | (1000 |      |       |
|                     |      |       |      | MT)   |      |       |
+---------------------+------+-------+------+-------+------+-------+
|                     | 2002 | Re    | 2003 | Est   | 2004 | For   |
|                     |      | vised |      | imate |      | ecast |
+---------------------+------+-------+------+-------+------+-------+
|                     | USDA | Post  | USDA | Post  | USDA | Post  |
|                     | Offi | Est   | Offi | Est   | Offi | Est   |
|                     | cial | imate | cial | imate | cial | imate |
|                     | \[O  | \[    | \[O  | \[    | \[O  | \[    |
|                     | ld\] | New\] | ld\] | New\] | ld\] | New\] |
+---------------------+------+-------+------+-------+------+-------+
| Market Year Begin   |      | 10    |      | 10    |      | 10    |
|                     |      | /2002 |      | /2003 |      | /2004 |
+---------------------+------+-------+------+-------+------+-------+
| Area Harvested      | 550  | 544   | 700  | 700   | 800  | 800   |
+---------------------+------+-------+------+-------+------+-------+
| Beginning Stocks    | 76   | 76    | 113  | 113   | 113  | 113   |
+---------------------+------+-------+------+-------+------+-------+
| Production          | 1550 | 1550  | 2100 | 2115  | 2000 | 2000  |
+---------------------+------+-------+------+-------+------+-------+
| TOTAL Mkt. Yr.      | 99   | 99    | 400  | 400   | 500  | 600   |
| Imports             |      |       |      |       |      |       |
+---------------------+------+-------+------+-------+------+-------+
| Oct-Sep Imports     | 99   | 99    | 400  | 400   | 500  | 600   |
+---------------------+------+-------+------+-------+------+-------+
| Oct-Sep Import U.S. | 0    | 0     | 0    | 0     | 0    | 0     |
+---------------------+------+-------+------+-------+------+-------+
| TOTAL SUPPLY        | 1725 | 1725  | 2613 | 2628  | 2613 | 2713  |
+---------------------+------+-------+------+-------+------+-------+
| TOTAL Mkt. Yr.      | 12   | 12    | 0    | 0     | 0    | 0     |
| Exports             |      |       |      |       |      |       |
+---------------------+------+-------+------+-------+------+-------+
| Oct-Sep Exports     | 12   | 12    | 0    | 0     | 0    | 0     |
+---------------------+------+-------+------+-------+------+-------+
| Feed Dom.           | 1200 | 1200  | 2100 | 2115  | 2100 | 2150  |
| Consumption         |      |       |      |       |      |       |
+---------------------+------+-------+------+-------+------+-------+
| TOTAL Dom.          | 1600 | 1600  | 2500 | 2515  | 2500 | 2600  |
| Consumption         |      |       |      |       |      |       |
+---------------------+------+-------+------+-------+------+-------+
| Ending Stocks       | 113  | 113   | 113  | 113   | 113  | 113   |
+---------------------+------+-------+------+-------+------+-------+
| TOTAL DISTRIBUTION  | 1725 | 1725  | 2613 | 2628  | 2613 | 2713  |
+---------------------+------+-------+------+-------+------+-------+

#