Monday, 6 March 2017

Monday morning Black Sea agribusiness news

Russia’s fertiliser stock is up 6% on last year prompting many to forecast another high yielding 2017 crop as a result.

Higher fertiliser stocks should, in theory, result in more crop but the correlation between fertiliser use and yield is actually weak as there are so many more variables that impact on crop growth with rain being the overarching one.

Russia is considering exporting part of its 4 million tonne state grain stockpile to free up storage space before the new crop arrives report Reuters.

With last year’s record harvest and this year’s slow pace of exports, the new season about to get underway will put pressure on the state and farmers to start clearing storage space.

But as the rouble continues to strengthen, Russian wheat remains expensive which won’t help exports and begs the question, will we see a fire sale soon?

Novorossiysk export prices for 12.5% and 11.5% protein milling wheat closed last week up $2 at $191194 FOB and $187189 FOB, respectively.

Talking of fire sales, the National Agricultural Cooperative Marketing Federation of India said it will facilitate exporting potatoes to Iran and Russia in order to avoid Punjab farmers making distress sales, which actually sounds like a distress sale.

They say they have orders to supply 2,800mt of potatoes to Russia and 5,000mt to Iran.

USDA report they think Russian and Ukraine grain area will likely grow by 5 to 10% in the next decade, which sounds about right to me although a lot less than some Russian officials have been suggesting.

Even so, 5% is still a significant amount of extra crop particularly considering Russia’s share of global grain trade has increased from 1% to 10% in the last decade.