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Russian winter wheat area to rise - but weather threatens EU, Ukraine


Russian winter wheat farmers have avoided the weather setbacks which are hampering European Union and Ukraine growers to set course for increased sowings, the United Nations said, while trimming ideas of the latest harvest.


In Russia, the area sown to winter wheat for the 2020 harvest “is foreseen to surpass this year’s level”, the United Nations food agency, the Food and Agriculture Organization said.


Area prospects had been “buoyed by favourable weather conditions”, the agency said.


Indeed, Russian growers had as of the end of last month sown 18.0m hectares of winter crops, up some 500,000 hectares year on year, and a “record” planting pace, according to analysis group SovEcon.


‘Policies to boost exports’

The FAO also said that plantings prospects had been “underpinned by government policies to boost exports”.


A briefing overnight from the US Department of Agriculture’s Moscow bureau noted that Russia’s agriculture ministry intended to raise to 8bn roubles ($120m) a subsidy programme for agricultural product transportation, in the face of “extremely high logistics costs” within the country.


“Internal transportation costs for Russian grains are higher than for US and Australian exporters,” the briefing said, also noting an agriculture ministry plan unveiled in August to raise Russian all-grains output to 140m tonnes by 2035, and expected to cost some 4,400bn roubles ($70bn).


Authorities have also negotiated to open up new markets to Russian wheat exports, notably of late Saudi Arabia, to which Russia “could ship up to 500,000 tonnes of wheat a year”, the bureau said, citing estimates of “industry sources”.


‘Contraction in area’

The FAO said that for Ukraine, “by contrast, dry weather conditions have continued to restrain planting activities… which could result in a contraction in the area sown to wheat in 2020”.


The comments tally with those on Tuesday from analysis group Refinitiv, which said that “low wheat prices and dry soils set Ukraine harvested area at 6.1m hectare, the lowest since 2012-13”.


The forecast area of 6.13m hectares, on a harvested basis, would be down 231,000 hectares year on year.


Refinitiv also noted that “the dry conditions and low soil moisture levels have taken their toll and already worsened the condition of the wheat crop, which makes them less resistant to potential severe frost” over the winter.


‘Critical need for rainfall’

The FAO said that for the European Union, the world’s top wheat grower, “low soil moisture levels have delayed sowings, particularly in eastern countries.


“Although the planting window extends until the end of the year, there is a critical need for rainfall.”


The European Commission’s Mars agrimeteorology division last week noted that “dry topsoil conditions have hampered sowing and emergence in Romania, Bulgaria, and Hungary”.


In fact, over the next few days, “showers in east central Europe will improve moisture slightly”, said Maxar.


However, excessive rainfall has emerged as a setback to plantings in many western European countries, including top grower France, where further precipitation is expected


“Rains in UK and western France will maintain wetness issues,” Maxar said.


In the UK, concerns that winter wheat plantings will not be completed have spurred a surge in prices of 2020 crop futures in London, where the November 2020 contract stood up 1.8% at £159.90 a tonne in late deals on Thursday, up 4.7% so far this month, and at its highest levels in 10 months.


‘Persisting rainfall deficits’

The FAO’s comments came as it trimmed by 1.0m tonnes to 765.0m tonnes its forecast for world wheat output in 2019, reflecting a “downgrading of the wheat production forecast in Australia, amid persisting rainfall deficits and consequently lower yield prospects”.


The estimate for the Kazakh crop was also cut, after “official data pointed to a more significant impact of early-dry weather on crops in the main wheat-growing regions”, with these downgrades more than offsetting upward revisions to EU and Ukraine harvest figures.


With the forecast for global coarse grains production this year trimmed too, by 1.3m tonnes to 1.426bn tonnes, largely on dryness setbacks to Australian barley and Mexican corn, the world grains harvest, including rice, was downgraded by 2.3m tonnes to 2,704bn tonnes.


The estimate for carryout inventories received a more modest downgrade, of 300,000 tonnes to 849.5m tonnes.


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