Area under wheat in Russia may become the minimum in ten years

The area under spring wheat may decrease by 4% this year compared to last year. The value may become the lowest in more than ten years. The refusal from wheat is dictated by unfavorable weather conditions and a shift in farmers’ interest towards more profitable crops – oilseeds and pulses. Analysts maintain positive expectations regarding the yield, but do not rule out their revision.

The area under spring wheat in Russia this year may amount to 11.8 million hectares, having lost 4.1% year-on-year, according to calculations at SovEcon. The value will be the lowest in at least ten years. Albina Koryagina, business development partner at the consulting company Neo, gives a similar forecast. But there is an opinion that the decline will be more pronounced – by 5.7% year-on-year, to 11.6 million hectares, she says. Dmitry Rylko, CEO of the Institute for Agricultural Market Studies, expects the area under spring wheat to decrease by more than 1 million hectares per year, to 11.5 million hectares. It is likely that the figure will be the lowest in many decades, he says.

In fact, as of June 11, according to SovEcon, 11.1 million hectares were sown with spring wheat in Russia, 10.5% less than a year earlier.

The Ministry of Agriculture told Kommersant that the total sown area for all crops will increase by 1 million hectares this year, to 84 million hectares. “Wheat will remain a key crop product and an export commodity of the Russian agro-industrial complex, but the structure of sown areas may change depending on market conditions,” the ministry added.

Sowing in Russia usually lasts until June 1, but this year, according to Dmitry Rylko, in the eastern part of the country, due to rain, the process ended later, by mid-June. “The regions provide operational reports, but they can be adjusted,” he warns. Andrey Sizov, CEO of SovEcon, explains that the most pronounced decrease in spring wheat sowing is observed in Siberia, by 700 thousand hectares year-on-year, and in the Urals – minus 300 thousand hectares. Dmitry Rylko says that farmers here are increasingly focusing on oilseeds and pulses crops, primarily rapeseed and sunflower. He attributes the trend to the growth of exports to China and the remoteness of the regions from large ports. According to SovEcon, the area occupied by winter wheat has decreased by 6.8% over the year, to 15.1 million hectares.

Albina Koryagina says that a total of 19.1 million hectares were sown, but about 6.8% of the crops perished. By harvest time, the figure will drop to 15.4-16.3 million tons, she believes. The expert calls this the minimum since the 2018/19 season. The total area under wheat will be 27-28 million hectares against 28.5 million hectares a year earlier, Ms. Koryagina expects.

Mr. Rylko notes that the share of winter wheat in sowing is growing: it is considered more productive. According to SovEcon data, last year winter wheat occupied 53.3% of the area allocated for the crop, this year – 56.1%.

Dmitry Rylko attributes the reduction in wheat acreage to falling profitability — “farmers are losing faith in the crop.” Albina Koryagina says that current grain prices, 12-14 thousand rubles per ton, are close to cost. To maintain profitability, they should be 18-20 thousand rubles per ton. Currently, according to expert estimates, the marginality of wheat cultivation in the Volga region and central Russia is 0-0.5%. At the same time, total sowing costs have increased by an average of 20% per year due to the rising cost of fuel, fertilizers, and seeds, says Ms. Koryagina. Quotas and floating export duties, according to her, reduce the benefits of foreign deliveries.

Andrey Neduzhko, CEO of the Steppe agroholding, notes that farmers have also encountered agroclimatic factors. In the southern regions, there is a lack of moisture in the soil, he says. This, according to the expert, changes the structure of areas in both winter and spring sowing. Farmers mainly opt for sunflower. The crop shows high profitability, but the area of ​​its sowing is regulated by the state – it is impossible to completely switch to seeds, he explains. After sunflower, according to the expert, businesses choose pulses – peas, chickpeas, lentils, etc. Ms. Koryagina believes that the profitability of sunflower is now 20-30%, rapeseed and soybeans – 15-25%, peas, chickpeas and lentils – up to 30%.

Despite the reduction in the area occupied by wheat, optimistic expectations for the harvest remain.

Last year, the wheat harvest, according to Rosstat, amounted to 82.6 million tons. SovEcon’s forecast for the current year is 82.8 million tons. Neo expects values ​​in the range of 80.1 million to 90 million tons. The expectations are based on the growth of the yield: it could amount to 2.82–3.0 tons per 1 hectare against 2.86 tons per 1 hectare a year earlier, says Ms. Koryagina. However, Kommersant’s source in the agricultural market notes that analysts are forming positive forecasts based on the low base of last year, when the harvest fell by 30%. “We are expecting a figure that will be higher than the disastrous last year, but will lag behind the value of the favorable 2023,” he reasons.

But the risks, according to Albina Koryagina, remain: a moisture deficit in the soil in the southern regions of the country and the Volga region can reduce crop yields by 10-15%. Andrey Neduzhko reminds us about spring frosts and drought. “In some areas of the Krasnodar Territory and Rostov Region, the government has introduced a state of emergency due to drought,” he reminds.