The influential analysis group pegged Russia's grain
shipments, which mainly comprise wheat, in 2012-13 at 20m tonnes, a drop of 28%
on its estimate for the current - unusually strong - season.
The US Department of Agriculture last week pegged the
decline in Russian grain exports at 19%, to 20.8m tonnes.
SovEcon said that its forecast reflected in part a dearth in
unsold inventories in areas close to port expected at the end of 2011-12,
following the rapid pace of exports, and the closure of a railway incentive
which has drawn replacement supplies from Russia's interior.
The end of June will bring the end of a period of discounted
transport from Siberia, where stocks are relatively plentiful.
However, SovEcon also flagged the impact of
"unfavourable weather" in southern regions, from which exports are
largely drawn, and which has attracted increasing market attention, given the
spur to global wheat prices which the first warnings in June 2010 over Russia's
last drought gave to prices.
Russia is typically seen as a supplier of ample supplies of
competitively priced wheat.
Separately, Macquarie analysts said that Russian drought was
the "biggest risk" to a forecast for lower wheat prices ahead, and nudged
higher by $0.22 to $5.57 a bushel its forecast for the average value of Chicago
wheat futures in 2012-13.
"The southern region is Russia's biggest winter wheat
production region, and this region accounts for the majority of exports," the
"If rains don't return to this region shortly, a significant
production loss is likely to cause a large loss to exports."
Return of the Sukhovey?
Indeed, on the markets, the growing fears for the crop
prompted fresh grains in wheat prices, which returned above $6.50 a bushel in
Chicago – taking gains so far this week to 10% - and closed up 2% in Paris.
At FCStone, Jaime Nolan-Miralles, noting that
"temperatures remain high and precipitation low" in southern Russia,
said: "Memories of yield decimation a couple of years back remain fresh in
the markets mind."
Indeed, in an echo of 2010, official Russian forecasters
have warned of a high risk of fire in rain-neglected areas.
Benson Quinn Commodities analyst Jonathan Watters flagged
talk of "the potential for Sukhovey winds, which destroyed much of the
crop in 2010".
The Sukhovey winds, which blow in from Asian desert areas,
have a history of disrupting agricultural output in Russia and Ukraine.
At Australia & New Zealand Bank, Paul Deane said that in
southern Russia, "crop development is now well behind this time last year
and the long-term average.
"Some areas are even being compared to the 2003 crop
which was southern Russia's smallest harvest in a decade."
And there is no prospect in sight of the weather conditions which
forecaster Gail Martell said had seen a "massive ridge of high pressure block
off rainfall from central and southern Russia", while raising temperatures "frequently"
above 85 degrees Fahrenheit and proving "persistently" 8-15 degrees above average.
"The new forecast shows high pressure keeping a grip on
European Russia in the upcoming week.
Thus, heat and dryness would continue along with ultra-low humidity," Ms
Martell, at Martell Crop Projections, said.
'Damage already irreparable'
Earlier this week, the Moscow-based Institute for
Agricultural Market Studies warned of "drought conditions" affecting
"the vast region of Rostov, Stavropol, Volgograd, some parts of Krasnodar
Even if rains do appear, as some forecasters believe,
"some [crop] damage already looks irreparable".
And Viktor Zubkov, on a trip to southern Russia, said that
"For this time of year the state of sugar beet, winter wheat and feed
crops is not very good and differs from last year's for the worse. The shoots
are stunted", according to the Itar-Tass news agency.
While the government has declined thus far to cut its grain
harvest forecast from 94m tonnes, news agency Reuters on Thursday quoted a
source as saying a downgrade may be issued later this month.