RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Cash squeeze threatens bounce in Kazakh wheat crop

Twitter Linkedin eCard

A shortage of farm finance, reflecting government pressure on growers to sell wheat on the cheap, represents one of the biggest risks of Kazakhstan wheat production – and exports - fulfilling expectations of a sharp rebound.

US Department of Agriculture attaches forecast a revival of nearly 50%, to 14.5m tonnes, in Kazakh wheat production, assuming no repeat of the drought which devastated last year's crop.

Official estimates show spring soil moisture reserves "varying between average and slightly below average", leaving forecasts for the harvest "better than the disastrously dry year of 2010", the attaches said in a report filed from the Kazakh capital of Astana.

The forecast, and estimate of a 40% jump to 7.1m tonnes in the country's wheat exports, were in line with those from Rabobank analysts on Friday after a field trip to the Black Sea agricultural region.

The country typically ranks sixth or seventh among world wheat exporters.

Debt payback

However, the attaches highlighted that Kazakh farmers had not only suffered weak yields last year, but failed to benefit in full from the run up in prices stoked by the dismal Black Sea harvests, after selling grain early to ease a cash flow squeeze.

Attache forecasts for Kazakh wheat, 2011-12, (year on year change)

Area harvested: 13.5m hectares, (-6.9%)

Production: 14.5m tonnes, (+49%)

Exports: 7.1m tonnes, (+42%)

Domestic consumption: 6.8m tonnes, (+17.2%)

Year end stocks: 3.39m tonnes, (+23%)

"Farmers flooded the market with their grain to get cash immediately in order to lower the debt they accumulated for the spring field work.

"Financing grain production will be one of the most serious problems in 2011."

'Considerable pressure'

Farmers' cash squeeze had been exacerbated by coercion to sell to the state grain body, the National Company Food Contract Corporation, at prices up to 25% below market to boost government reserves.

"As expected, grain producers tried to avoid selling their products to Food Corporation," the briefing said.

"However, there is evidence to suggest that the local government administrators applied considerable pressure to producers to sell to the Food Corporation."

There was also evidence that the Ministry of Agriculture had "applied considerable pressure to producers to take a loss and sell" to the corporation, whose holding company includes on its board Kazakhstan's deputy prime minister and senior ministry officials.

Regional export prospects

Rabobank also forecast a strong recovery, to 11m tonnes, in wheat exports from Ukraine, which is grouped with Kazakhstan and Russia among the Black Sea agricultural states who gained a reputation for cut-price grain exports until last year's weather setbacks forced curbs on shipments.

However, shipments from Russia, historically the region's largest exporter, will remain muted, at 5m tonnes, given setbacks to sowings from a dry autumn and late spring.

"The Black Sea region is unlikely to return as a major wheat exporter in 2011-12," the bank said.

"The region's hangover from last year's drought and increased politically enforced restrictions, in our view, will prevent an influx of low-cost wheat availability to the global market."

By Agrimoney.com

Twitter Linkedin eCard
Related Stories

Evening markets: Calendar and dollar revival provoke ag market reversal

For cotton futures, that means a higher close, but the likes of soybeans and corn struggle. Coffee futures maintain downward trajectory

Weekly grain and oilseed market view from Europe

Sluggish EU wheat exports... but buoyant feed demand... impact of euro currency moves...

Morning markets: Year of the dog starts broadly positive for ags

That is, what movement there is is largely upward. But the lunar new year is not the only calendar factor to watch out for...

Evening markets: Dollar weakness, weather worries lift ag prices

Cocoa futures prove particularly strong, while soymeal sets a 19-month high, and corn futures a six-month top
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069