Russia Agribusiness Report Q4 2011
Includes 3 FREE quarterly updates
BMI View: Russia finally ended its grain export ban on July 1, potentially bringing to an end a period of short supply and high prices on the global market. Early developments in H211 suggest a promising picture in terms of strong exports, while this year's improved - though by no means spectacular - harvest has boosted confidence in supply levels over the 2011/12 marketing year. With heavy orders so far from Egypt defying many expectations, our prediction that Russia would retake its place as one of the world's largest wheat exporters appears to be proving correct. Domestic prices have fallen recently, suggesting exports can remain strong.
Key forecasts
In 2011/12, we are forecasting wheat production to rebound 25.5% to 52.1mn tonnes. Output is expected to fall short of levels in 2009/10 due to a lower planted area for the winter crop due to soil dryness.
Corn production in 2011/12 is forecasted to rise to 5.06mn tonnes, up 65% year-on-year as farmers cash in on high prices.
We continue to forecast poultry production growth in 2010/11, albeit at a slower rate than in 2009/10, as higher feed costs and production capacity constraints limit production growth. We are now forecasting production in 2010/11 to reach 2.5mn tonnes, a year-on-year increase of 8%.
The outlook for beef is less rosy due to poor producer returns and the current high feed costs. In 2010/11, we are forecasting beef production to fall slightly to 1.4mn tonnes owing to high feed costs and a slight fall in cattle inventories.
In 2010/11, we forecast milk production to remain virtually flat at 32.0mn tonnes. Higher yields and rising milk prices will stimulate production over the short to medium term, but the herd will be drawn down due to the summer heatwave.
Real GDP to grow 4.6% in 2011 and 4.5% in 2012.
Industry developments
Russia finally removed its export ban on July 1. Early developments in H211 suggest a promising picture. This year's improved harvest is already boosting confidence in production levels, leading to falling prices. Meanwhile, our expectations that Russia would retake its place as one of the world's largest wheat exporters appear to be proving correct. In July, Russia cleared up at Egyptian wheat tenders, winning its third tender in a row since the abandonment of the ban. The three orders meant Egypt bought 480,000 tonnes of Russian wheat in July.
Russia's historically rocky trade relations with Belarus flared this year when the devaluation of Belarus' currency lowered the price of its exports to the point where Russian producers complained they were unable to compete. In response to producers' concerns, the Russian government renegotiated the terms of bilateral trade with Belarus. The two countries' respective agricultural ministries agreed to monitor prices of Belarusian dairy exports on a weekly basis to ensure they remained within agreed limits. If prices deviated from the limits, exports to Russia could be suspended.
BMI View: Russia finally ended its grain export ban on July 1, potentially bringing to an end a period of short supply and high prices on the global market. Early developments in H211 suggest a promising picture in terms of strong exports, while this year's improved - though by no means spectacular - harvest has boosted confidence in supply levels over the 2011/12 marketing year. With heavy orders so far from Egypt defying many expectations, our prediction that Russia would retake its place as one of the world's largest wheat exporters appears to be proving correct. Domestic prices have fallen recently, suggesting exports can remain strong.
Key forecasts
In 2011/12, we are forecasting wheat production to rebound 25.5% to 52.1mn tonnes. Output is expected to fall short of levels in 2009/10 due to a lower planted area for the winter crop due to soil dryness.
Corn production in 2011/12 is forecasted to rise to 5.06mn tonnes, up 65% year-on-year as farmers cash in on high prices.
We continue to forecast poultry production growth in 2010/11, albeit at a slower rate than in 2009/10, as higher feed costs and production capacity constraints limit production growth. We are now forecasting production in 2010/11 to reach 2.5mn tonnes, a year-on-year increase of 8%.
The outlook for beef is less rosy due to poor producer returns and the current high feed costs. In 2010/11, we are forecasting beef production to fall slightly to 1.4mn tonnes owing to high feed costs and a slight fall in cattle inventories.
In 2010/11, we forecast milk production to remain virtually flat at 32.0mn tonnes. Higher yields and rising milk prices will stimulate production over the short to medium term, but the herd will be drawn down due to the summer heatwave.
Real GDP to grow 4.6% in 2011 and 4.5% in 2012.
Industry developments
Russia finally removed its export ban on July 1. Early developments in H211 suggest a promising picture. This year's improved harvest is already boosting confidence in production levels, leading to falling prices. Meanwhile, our expectations that Russia would retake its place as one of the world's largest wheat exporters appear to be proving correct. In July, Russia cleared up at Egyptian wheat tenders, winning its third tender in a row since the abandonment of the ban. The three orders meant Egypt bought 480,000 tonnes of Russian wheat in July.
Russia's historically rocky trade relations with Belarus flared this year when the devaluation of Belarus' currency lowered the price of its exports to the point where Russian producers complained they were unable to compete. In response to producers' concerns, the Russian government renegotiated the terms of bilateral trade with Belarus. The two countries' respective agricultural ministries agreed to monitor prices of Belarusian dairy exports on a weekly basis to ensure they remained within agreed limits. If prices deviated from the limits, exports to Russia could be suspended.
Contents
Executive SummarySWOT Analysis
Russia Agricultural SWOT
Russia Political SWOT
Russia Economic SWOT
Russia Business Environment SWOT
Industry Forecast Scenario
Russia Dairy Outlook
Russia Milk Production, Consumption & Trade
Russia Butter Production, Consumption & Trade
Russia Cheese Production, Consumption & Trade
Russia Milk Production, Consumption & Trade
Russia Butter Production, Consumption & Trade
Russia Cheese Production, Consumption & Trade
Russia Rice Outlook
Russia Rice Production, Consumption & Trade
Russia Rice Production, Consumption & Trade
Russia Grain Outlook
Russia Wheat Production, Consumption & Trade
Russia Corn Production, Consumption & Trade
Russia Barley Production, Consumption & Trade
Russia Wheat Production, Consumption & Trade
Russia Corn Production, Consumption & Trade
Russia Barley Production, Consumption & Trade
Russia Livestock Outlook
Russia Poultry Production, Consumption & Trade
Russia Pork Production, Consumption & Trade
Russia Beef & Veal Production, Consumption & Trade
Russia Poultry Production, Consumption & Trade
Russia Pork Production, Consumption & Trade
Russia Beef & Veal Production, Consumption & Trade
Commodity Price Analysis
Monthly Softs Update
Cocoa
Table: Cocoa
Coffee
Table: Coffee
Milk
Table: Milk
Sugar
Table: Sugar
Monthly Grains Update
Corn
Table: Corn
Rice
Table: Rice
Soybean
Table: Soybean
Wheat
Table: Wheat
Downstream Supply Chain Analysis
Industry Forecast Scenario- Food
Consumer Outlook
Food
Total Food Consumption
Table: Food Consumption Indicators -- Historical Data & Forecasts
Mass Grocery Retail
Table: Russia's Top 10 Mass Grocery Retailers
Table: Mgr Value Sales By Format -- Historical Data & Forecasts
Trade
Table: Food, Drink & Tobacco Trade Indicators (US$Mn) -- Historical Data & Forecasts
Macroeconomic Forecast
Table: Russia - Economic Activity, 2008-2015
Global Food & Drink View
Food & Drink Roundup Q211: Core Views
BMI Forecast Modelling
How We Generate Our Industry Forecasts 59 Skip to top