A global overview on markets, commodities and regions
Welcome to the first edition our Agri Trade newsletter. Drawing on our market and industry expertise we hope you will find the following information useful.
Last year was a difficult season in Eastern Europe, the grain quality was very good but the quantity was disappointing, much lower than expected. Nevertheless, on the threshold of the new export season there is real interest in the Russian market. In this issue we will also review the Ukrainian and Kazakhstan markets to give you an overview of the export estimates.
To find out more about the market review and the quality of the grains, we recommend you read our more detailed information about quality maps available for Eastern Europe.
Official data from the Russian authorities confirm that 16 million hectares of land was sown for winter crops in 2012. At the end of the winter, and following examination by officials, the crop condition has been confirmed as of generally good quality, especially in the main export regions of South and Central Russia.
Current assessments estimate that winter kill loss may be more than 10% in some regions. This figure is not significant according to the Russian Grain Union. The losses are unlikely to affect the availability of crops for export. Agricultural producers estimate that winter sown crops will yield a harvest in the region of 38 to 41 million tonnes. Spring sown crops look less optimistic. The Agricultural Ministry’s planned cultivation of 33 million hectares has not been achieved, with just 28 million hectares to be sown. As a result the spring crop harvest is expected to yield in the region of 48-50 million tonnes.
Market analysts now estimate the annual yield to be in the range of 88-96 million tonnes. The official forecast is 90-94 million tonnes. Achievement of these figures, at the higher or lower end of the range depends on two things, weather conditions and the successful implementation of the planned spring sowing.
The predicted export volume for the 2013/14 season is in the region of 20-22 million tonnes, 14-16 million of which could be exported in the first half of the season. There is increased interest in corn crops, which according to industry specialists will not exceed the internal wheat price during the coming season.
UKRAINE & KAZAKHSTAN
Forecasts for the Ukraine and Kazakhstan appear to be more reliable. Production within Ukraine is expected to realise some 53 million tonnes, almost half of which will be exported. In Kazakhstan, where production is expected to increase some 49% compared to last year, exports could reach 7 million tonnes, from an overall yield of 16.6 million tones.
As has been witnessed in the last two growing seasons, changes in weather patterns can seriously affect grain crops. Drought, as well as too much rain can negatively impact the growing season and diseases can easily develop in these conditions. We remember that in 2011, inclement weather caused almost 70% of the Ukrainian crop to be adversely affected. Exports were reduced and the crop quality was so poor that much of it was fit only for use in the feed market.
SGS has established market research services to help you determine and follow up on the quality of wheat, barley and rapeseed in Eastern Europe. Our inspectors perform thousands of analyses at ports, as well as on farms and at storage locations. Our services help you to understand the evolution of the crop and the average grade of each commodity:
- What is the average moisture of the crop?
- Is it shrivelled?
- What is the W average?
- What is the grade?
- Will it be for feed or food market?
- What is the expected export quantity?
- Will the grain price increase or decrease?
- What will my profit margin be?
Taking into consideration that purchase prices are expected to go down in May and June, it is important to track the quality and quantity produced for this season. Stock volumes should also be kept in mind. Expert estimates of Russia’s stocks vary from two to six million tonnes, which is very low compared to last year.
SGS’s portfolio of trade services has been developed to effectively meet your needs. Utilising the latest technologies and a unique network of experts; we can provide inspection, risk management, analytical and fumigation services, as well as comprehensive guarantee services.
SGS also provides quality maps data on crop for Russia, Kazakhstan, Ukraine, Serbia and more countries. SGS inspectors follow the harvest wave taking multiple samples to create each map. You can then select specific areas to get the full list of quality test results per crop (maximum, minimum and average) in that location. These results cover a range of parameters including protein, moisture, test weight and foreign matter and ensure you have the latest data available to inform decision making. To get more information and subscribe to our quality maps services please visit our 2013 brochure.
Guarantee services from SGS eliminate risks and ensure quality and quantity. This service includes expert inspection and testing at key points of loading and discharging. To read more information about our guarantee services, click here.
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For further information, please contact:SGS Agricultural Services
Regional Business Development Manager