09:44 UK, 1st June 2010, by Agrimoney.com
China talks up wheat just as Russia lowers its aim

Officials in China, the biggest wheat producing country, have underpinned hopes for the country's wheat harvest just as those in Russia, the growing export force, are cutting grain output forecasts.

China's agriculture ministry said it expected winter wheat production this year to come in slightly ahead of last year's, the state-run Xinhua news agency reported.

While failing to give figures, the estimate bodes well for the overall wheat harvest, after cold weather setback the spring crop.

Winter wheat accounts for 90% of China's total wheat crop, which the US Department of Agriculture has forecast declining 2.5m tonnes to 112.0m tonnes this year.

'Certain problems' 

Russia's farm minister, Yelena Skrynnik, cut to 88m-90m tonnes, from 97m tonnes, her estimate of the grain harvest in the Black Sea agricultural powerhouse.

"We have certain problems with winter grains, of which we will harvest 3m tonnes less," Ms Skrynnik said, according to the Interfax news agency.

The forecast puts the official forecast in line with that of many analysts, including SovEcon, the Moscow-based consultancy, which last week cut to 84m-89m tonnes, from 87m-92m tonnes, its grain harvest forecast.

SovEcon's reduction reflected worsening estimates for the damage caused by a cold winter, which destroyed 30-40% of crops in some areas, and the impact of a late spring on sowings.

Market 'scepticism'

However, industry figures have voiced prospects of a significantly larger crop, with the Russian Grain Union standing by a forecast of production potentially topping 100m tonnes, if weather for the rest of the season proves benign.

And some observers have raised doubts about levels of winterkill, which have, in Russia as well as in neighbouring Ukraine, proved contentious.

"There is scepticism within the trade that winterkill figures and production declines are being inflated in order to support domestic prices and increase grower returns," analysts at Rabobank said in a report on Friday.

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