Russia upgrades grain hopes, despite dryness fears
By - Published 22/05/2014

Russia's agriculture minister raised the country's official forecast for its grains harvest, despite the dryness in Central and Volga Valley regions which has raised concerns among some other commentators.

Nikolai Fyodorov pegged Russian grains production this year at 100m tonnes, up from a previous forecast of 95m-98m tonnes.

A harvest at this level would also represent a significant increase on last year's 92.4m-tonne result.

And Mr Fyodorov downplayed in his revision a contribution from Crimea, which Russia annexed two months ago, but which analysis group SovEcon cited this week as behind a 2m-tonne upgrade, to 90m tonnes, in its estimate for this year's harvest.

"As for Crimea, there's a drought there now," Mr Fyodorov said.

"We are not counting on Crimea. It is an experimental region for us at the moment."

'Drought and heat stress'

In fact, "most private sector forecasters are looking for a crop of 92m-95m tonnes, similar to last year," Richard Feltes at Chicago broker RJ O'Brien said.

Many observers are concerned with a dearth of rainfall in Central and Volga Valley regions and, further south, in some parts of North Caucasus, a major source of grain export supplies.

At Martell Crop Projections, Gail Martell cautioned that "in southern Russia, prospects have worsened from intensifying drought and heat stress", with temperatures reaching 90s Fahrenheit (32-34 Celsius).

"Rainfall has been negligible over the past month in Russia's four key winter wheat districts - Krasnodar, Stavropol, Rostov and Volgograd."

'Slight improvements will be possible'

Agritel, the Paris-based consultancy with a regional Black Sea operation, said that "questions grow on the south of Russia, where weather forecasts are still dry and hot.

"The water deficit intensifies, and really hot days are forecast," especially this weekend, Agritel said.

"The market will be watchful to this situation."

However, there is some hope of rains next week, with MDA noting a wetter outlook in the six-to-10 day forecast.

"Some slight improvements will be possible next week," the weather service said, if cautioning of discrepancy between weather models.

Furthermore, analysts have pointed to moisture reserves in subsoil, replenished by rains in March, as offering some protection against the current dry spell.

Mr Fyodorov said that "there are some reasons to increase the [grain harvest] forecast today.

"We are monitoring and are adjusting it for growth."

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