Market Morsel: Worlds largest wheat exporter falling behind.

SovEcon cut Russia’s 2021 wheat crop forecast from 77.7 to 76.2 MMT on weather, new export tax

SovEcon, a leading Black Sea agricultural markets research firm, cut 2021 Russia’s wheat crop forecast from 77.7 MMT to 76.2 MMT.

The drop reflects some deterioration of weather conditions in February.  Ice crust in parts of Black Earth and Volga Valley is becoming an issue. Winter wheat crop estimate was decreased from 54 MMT to 53.6 MMT.

Spring wheat crop estimate was decreased from 23.6 MMT to 22.6 MMT amid the planting area revision due to new strict wheat export taxes from the 2^nd of June.

Spring wheat is forecast could be cut further in the future after SovEcon assesses farmers’ intentions more accurately. Many of them have not made final plans for the 2021 sowing campaign yet.

In 2020 Russia, #1 world wheat exporter, harvested 85.9 MMT of wheat (85.3 MMT ex. Crimea).

Andrey Sizov, head of SovEcon: “Russia could produce a substantially lower wheat crop in 2021. The main issue is that plants entered the current winter in the worst shape in a decade after abnormally dry autumn. January was generally favourable for the new winter wheat crop, but February weather is not.

The new wheat tax also has a negative effect on the 2021 crop. Some farmers will try to switch from wheat to other crops, mainly oilseeds and pulses.

Second, many farmers are expected to cut ag inputs application this year, making plants more vulnerable to weather risks. This may lead to a poor crop if we see serious weather anomalies.

Sizov.report: we are helping funds, traders, and buyers to trade and manage their risk better by providing consistent data and accurate analysis of the Black Sea grain market.

Thomas Elder Markets

Tags: Russia, wheat