Global Hotspots: Russian wheat needs rain

Global Hotspots: Russian wheat needs rain

Russian wheat needs rain, India to sell surplus wheat and ocean shipping rates remain low

1. Russian wheat fields need rain - Reuters

Farmers in Russia's Rostov region, one of the most important for wheat exports, face flat or lower wheat yields this year due to a lack of rain last autumn, and the current hot weather may worsen the situation without rain in the coming weeks, according to a Reuters report.

Rostov is the second southern region affected by a lack of moisture after Krasnodar, the main region for wheat exports via the Black Sea to North Africa and the Middle East.

Russian wheat needs rain, India to sell surplus wheat and ocean shipping rates remain low

"Weather conditions were tough last autumn … but good rain came at the end of April and early May and allowed the moisture level to restore significantly," Roman Bondarev, RZ Agro chief operation officer, said in the story. The group's fields in the southern Rostov region are expected to see winter wheat yields very similar to last year's five tons per hectare.

The quality of wheat should remain flat this year, Bondarev added. About 70% of the crop should be milling quality, of which third-class wheat will total 10%-15%.

At another farm in the southern Rostov region, the plan is to get 3.6 to 3.7 tons of wheat per hectare compared with 3.9 tons last year, Vladimir Abramov, an agronomist at Agro Michurinskoye, said.

2. India to sell surplus wheat – The Economic Times, India

To liquidate surplus stocks and improve supply in the open market, the Indian government will sell wheat from the state-run Food Corporation of India stocks to bulk consumers from June in Punjab and Haryana and beginning in July in other wheat growing states, The Economic Times said this week.

From April 1, the Food Corporation of India started selling wheat under the open market sale scheme to non-wheat producing states.

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"In view of poor response from non-wheat growing states and to liquidate surplus stocks, we are extending the sale of wheat under OMSS to wheat-growing states," a senior Food Ministry official told PTI.

The official said that FCI has so far been able to sell only 400 metric ton of wheat in non-wheat growing states. As a result, beginning in June it will sell wheat in Punjab and Haryana states.


3. Ocean shipping rates remain low

Ocean freight rates for shipping bulk commodities, including grain, remained low as excess vessel capacity persists in the market, USDA's Grain Transportation Report said this week.

As of May 22, the cost of shipping bulk grain from the U.S. Gulf to Japan was $30.25 per metric ton, down 22% from the beginning of the year and down 38% from the 4-year average. The cost of shipping from the Pacific Northwest was $16.50 per ton, down 21% from the beginning of the year and down 38% from the 4-year average.

 Meanwhile, 241 new vessels have been delivered between January and April, and 177 vessels were sold for demolition, leading to a net gain of 64 vessels. According to a May 22 Transportation and Export report by O'Neil Commodity Consulting, Inc., 1,066 new dry bulk vessels are due for delivery this year, 732 in 2016 and 184 in 2017. In addition, nearly 67% of the global dry bulk fleet has been built in the past 14 years.

Some analysts predict ocean rates will remain relatively low until 2017-18, while others predict the current freight market will last until 2020.

TAGS: Wheat
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