Russia Adds to World Wheat Quality Fears


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Russia has joined the list of countries with a question mark over wheat quality, with the early harvest falling short of expectations – albeit to the benefit of the poultry producers Moscow is attempting to encourage.

SovEcon, the influential analysis group, warned that “market players in many producing regions” of Russia were reporting that this year’s wheat harvest had, on quality, fallen short of expectations.

“The supply of feed wheat is at a high level, while that of milling wheat is limited,” the Moscow-based group said.

Andrey Sizov, the SovEcon managing director, told that there was a “lack of high quality wheat in the market”, which was being reflected in a lack of offers for milling wheat in Russia’s southern and black earth regions.

Higher premium

Prices of third-grade milling wheat had risen by 6.2{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} to 5,540 roubles a tonne over the past week in European Russia, with fourth-grade, the type exported, up 4.4{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} to 5,350 roubles a tonne, on SovEcon data.

“Right now [the shortage of milling wheat] looks like it is a problem. It looks like the premium of high quality wheat may be higher than usual,” Mr Sizov said.

He added that milling wheat supplies could “improve” as the harvest hits Siberia, which normally produces high levels of milling wheat.

’Reined in by strong rains’

 The comments come ahead of a conference on Monday from Russian officials monitoring grain quality, who had been expecting a high quality crop.

“According to the government agency responsible for grain quality evaluation in Russia, this year the quality is expected to be better than average, with the share of food wheat at 75{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3},” US Department of Agriculture officials noted last week.

And it follows concerns in Ukraine, where as little as 40{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} of wheat may be of milling grade, according to private analysts, and Germany, the European Union’s second-ranked producer of the grain, where wet weather has, for a second year, compromised quality.

“In Germany, harvests were reined in by strong rains this weekend,” Agritel, the Paris-based consultancy, said on Monday.

“Operators consider that 60{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} of area is yet to harvest in the key north region of Germany. As a matter of fact, quality should be downgraded again.”

In the US, reports have agreed on threats to spring wheat harvest delays, and potentially smaller area than had been thought, if conflicting on crop quality.

The UK grain arm of a major global commodities house on Friday noted the US spring wheat crop was suffering “poor early yields, widespread disease and rain constantly battering what is left out in the fields”.

Broiler booster

However, the Russian crop outcome appears a further fillip to the domestic poultry industry, also enjoying substantial government support as the country seeks to turn self-sufficient in chicken.

“Feed supply should be available at appropriate prices for the Russian poultry industry over the next year,” USDA attaches in Moscow said, forecasting that the country’s output of broiler meat will rise 9.1{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} to a record 2.75m tonnes in 2012.

And further expansion is expected, with some 600,000-700,000 tonnes of broiler meat production expected to come online “within the next couple of years”.

Miratorg, Russia’s leading pork producer, alone has plans to enter poultry and develop annual output of 105,000 tonnes.

The extra domestic output, coupled with a cut in import quotas, will cut Russia’s buy-ins of broiler meat to a 19-year low of 354,000 tonnes next year, the attaches said.



Posted by Haylie Shipp


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