Higher prices encourage Russian farmers to increase winter grain area

Russian farmers are on track to increase winter grain plantings for the 2016 crop spurred by higher domestic prices, the SovEcon agriculture consultancy said.
 

Domestic grain prices in Russia, one of the world’s top wheat exporters, have been supported by a weakened rouble, caused by lower oil prices and Western sanctions related to the Ukraine crisis.
 

“The increase in prices for agriculture inputs has been lagging the growth in domestic rouble prices for grain,” said Andrey Sizov, head of SovEcon. “All in all, farmers are doing relatively well now.”
 

Domestic prices for third-class wheat have risen 35 percent year on year to 10,100 roubles ($150) per tonne. The rouble has weakened by 44 percent against the dollar.
 

Export FOB prices have fallen by around a quarter and were at $181 per tonne in early September.
 

Lower global oil prices have constrained the increase in rouble prices for fuel, fertilisers and pesticides. As a result, farmers’ production rouble costs rose by about 10-15 percent, according to SovEcon’s estimate.
 

The Agriculture Ministry currently expects winter crops to be sown on 17.1 million hectares for the 2016 crop, up from last year’s 16.8 million hectares.
 

As of Sept. 7, Russia had sown 5.0 million hectares, or 30 percent of its planned area for winter crops, compared with 4.4 million hectares at the same stage a year ago. Winter grains usually account for about 40 percent of Russia’s annual crop.
 

This year’s sowing campaign is running ahead of last year’s pace thanks to favourable weather in the area from Volgograd to Tatarstan, Sizov said.
 

However, the weather is dry and rain is needed in Russia’s southern regions of Krasnodar, Rostov and Stavropol, the key area for wheat production and exports.
 

“The situation is not critical there. They usually start sowing later than Russian Central regions and can do it in October,” Sizov said.
 

Last autumn Russia’s winter grains were hit by dry weather, but mild winter and spring rains improved their condition. The country is currently harvesting the third-largest grain crop in its post-Soviet history.