Wheat this year in Russia can collect much more than planned, especially in the Central and Volga federal districts. Wheat harvests close to the record are shown there. Following the Russian experts, the US Department of Agriculture (USDA) also raised the forecast for wheat harvest in Russia. The US Department of Agriculture estimates that wheat harvest in Russia is only 1.5 million tons from 76.5 million tons in July to 78 million tons, excluding the harvest in the Republic of Crimea. The US Department of Agriculture has also increased the export estimate by 1.5 million tons - up to 37.5 million tons.
In general, the forecast for world wheat production in the 2020/21 season has been reduced by almost 3.5 million tons. The largest crop decline USDA predicts for the EU, minus 4 million tons due to drought in Eastern Europe.
Over the past few days, Russian experts have also raised their forecasts for the grain harvest based on data from the State Statistics Agency. According to Andrey Kichaev, Director General of the «GeoBuro» Land and Legal Center, Russia can harvest 128 million tons of grain this season - this is the second result after a record of 135.5 million tons in 2017. Including the wheat harvest may reach 80 million tons, excluding the Republic of Crimea. In a record 2017, Russia harvested 86 million tons of wheat.
The USDA clearly underestimates Russia's potential in grain yields. The problems of two regions in the South of Russia and four in Siberia and the Urals are offset by record harvests in the Central and Volga regions. In the Center, the yield is higher than the record 2017 by 5-7% percent, and in the Volga region it has grown to the level of 2017. It should be borne in mind that this year, a record area since 1980 has been used for wheat. According to the State Statistics Agency – «Rosstat», in 2020, wheat was allocated 29.5 million hectares of arable land, or 1.3 million hectares more than in 2019.
According to the Russian Ministry of Agriculture, as of August 12, grain and leguminous crops have been harvested from 48% of the sown area. Wheat has been harvested from more than half of the area. Its yield exceeds last year's indicators. The Ministry of Agriculture of Russia expects that the harvesting will take place in a regular manner and the forecasts for the harvest will be fulfilled, said the Minister of Agriculture Dmitry Patrushev in early August. So far, according to the Ministry of Agriculture, the estimate for the grain harvest will be at least 123 million tons. The purchase price of Elevators from farmers on August 20 was 12,500-13,000 rubles, which is $ 175 per ton. With a production cost of $ 55-75 per ton, depending on the region and the volume of cultivated land.
Russia already sells grain to more than 100 countries around the world and dominates the key Egyptian and, accordingly, the Arab market, where this season Romanian and French grain are still on the sidelines due to drought in Romania and more expensive production in France.
The global market is currently shaken by a crop failure in the European Union amid the coronavirus pandemic and extreme weather and drought. Nevertheless, experts are confident that there will be no deficit in the market, since Russia and several other countries, in particular Australia, will be able to compensate for these losses.
Russia is selling more to traditional EU exporter markets such as North Africa and the Middle East, which could leave less grain available for supply to Southeast Asia, which will also have a positive impact on sales to Australian farmers in the region.
At the end of the first half of 2020, taking into account data on the EAEU countries, Russia exported agricultural products worth more than $ 13 billion, which is $ 2 billion more than the same period last year.
The corona virus provoked massive downtime in all industries, which formed a unique situation for Russia. Russia actually turned out to be almost the only major player in the agricultural world market, capable of providing food not only for its citizens, but also for all other countries who need it. According to the Ministry of Agriculture of Russia, in 2019 the supply of agricultural products reached a record $ 25.5 billion, which is $ 1.5 billion more than planned.
The ability of Russian agriculture to produce a lot of raw materials and process them into finished products has significantly increased over the past ten years, and the momentum gained, which in the next four years will enable exports from Russian Agrarians to reach a colossal volume of 45 billion dollars.
Market participants, agrarians and processing companies note that domestic farmers have already been able to feed Russia with high-quality meat, fish and bread. In addition, with the growth in the production of good meat, natural milk and bread, their production increased as expected. This, according to experts, was also noted in the West in the reports of the US Department of Agriculture, therefore, immediately after the pandemic, one should expect a surge in agricultural investment projects, both with domestic and foreign participation, believes Andrey Kichaev.
One of the most important projects for Russia is the Baltic Grain Terminal with an investment of 5 billion US dollars, which is actively being built in the Leningrad Region. If the speed of development of agriculture in Russia is maintained at the same pace, then in the coming years such facilities will be in greater demand than oil and gas terminals. And Russia will receive another source of income with a stable value, and it will be possible to forget about the prices of oil and gas.