On the Eurasian continent forms a rather complicated game of solitaire in the grain market. While farmers are waiting for the new crop, the most far-sighted of them are already asking themselves – where and in what quantities they will sell the crop-2013, whatever the volume of it would be. Some cards have already been opened: the countries of Central and Middle Asia, one after another report about the high grain yield. Summing up all the forecasts, Kazakhstan will also have the above average crop. Where this grain will flow? Whether the 2013 harvest will provoke traditional elevator collapse? Whether an exaggerated supply of grain will lead to a sharp drop in prices? All “pros” and “cons” were analyzed by the expert of our agency.
Crop Forecasts for 2013
As previously reported, the climate conditions of plant growth in June was less favorable than we would like. A good basis for the crops in the form of high moisture content in the soil before planting nullified too dry in June with a minimum of rainfall. However, in July remedied the situation. In most grain growing regions poured rains, in many places even excess. This greatly supported the plants, except those crops on which the previous heat finally killed the germs.
The rains now will play a positive role in the maturation of the next harvest, experts stressed. Most of the plants are in tube and they endured the sun examination. But dry and hot June and then cool and wet July is not the most ideal weather change for the formation of a good harvest. The reason for the cool weather in the middle of the summer is associated with the arrival of cyclone which formed over the Aral Sea to the region. Due to it, the amount of precipitation in July was above the monthly norm.
Agrimeteorologist Larissa Kuzmina from Kostanay region called June unfavorable for plant growth. Because of the hot and dry weather they formed undersized. But some changes have been made the July rains. The moisture in the soil throughout the region is unevenly distributed; all the crops are now in the heading stage, and soon the grain filling will begin.
After the grain will form, we do not need moisture, and excess moisture – it’s only minus for ripening of grain. For maturity dry and hot weather is necessary, in order grain could be of high quality, with good characteristics, she added.
Thus, the fate of future crops will depend on the weather in August, the sunnier a month is – the higher the yield we will get. According to preliminary estimates, the average temperature in August is above normal by a few degrees, and the second and third decades will be truly hot.
Still no one undertakes to forecast the volume of new crop; climatic risks are too high. Even more unknown is in predictions of grain quality before the start of harvesting campaign, as well as the cost of the harvesting campaign itself. Rains and wet abundant grain can significantly increase the cost of the new crop.
By the start of the new marketing season in Kazakhstan, according to statistics, there are about 5 million tons of grain left, which is significantly less than last season, but is enough with surplus for export and the needs of domestic market of the country. For reference, on July 1, 2012 in Kazakhstan was 9,813,548 tons of grain. According to the Agency for Statistics, as of June, 1 there was 6,893,321 tons of grain in Kazakhstan, and on July 1 – 4,964,620 tons. As a result, in June, the country had consumed 1,928,701 tons of grain, or 28% of the grain available on June, 1.
We recall, during May, as a result of planting, consumption and export, the volume of grain in Kazakhstan fell by a quarter. According to the Agency for Statistics, as of May 1, grain stocks in Kazakhstan amounted to 9,255,850 tons, and decreased in April by 1,062,160 tons, or 10.3% compared with March. And in May, cereal stocks decreased by 2,362,529 tons, or 25.5%.
Total, due to the sowing campaign in May and June, as well as domestic consumption and exports for the period grain reserves fell by 4,291,230 tons, or 46.4% as of May 1.
In the structure of the grain, as of July 1, the volume of wheat grow even more in relation to other cultures – 4,625,961 tons (93.2% of total reserves), of which 4,459,309 is food wheat, 76,608 tons for seeds and 90,044 tons for fodder. The amount of barley in the bins of the republic ,on July 1, reached 142,480 tons (2.9%). the volume of rice in Kazakhstan at that date was 39,134 tons (0.78%), oats, 28,003 (0.56%), and corn and buckwheat 10,362 tons (0.2%) and 12,463 (0.25%).
Recall, on June 1, there was 6,287,671 tons of wheat in the country (91.2% of total reserves), of which 5,509,850 is food, 1,593,724 tons for seeds and 140,355 tons for fodder. The second-largest reserves belong to barley. In the granaries in the country, as of June 1, was kept 278,099 tons (4%). The volume of rice in Kazakhstan at that date was 54895 tons (0.8%), oats 48,787 (0.7%), and corn and buckwheat 11,660 tons (0.2%) and 19,430 (0.28%), respectively.
Most of the grain, on July 1, was concentrated in CRP and elevators – 3,217,287 tons (3,870,190 tons in June) in agricultural enterprises – 898,180 tons (1,744,022 tons). On mils there were 672,598 tons (692,396), and farm households – 176,555 tons (586,713).
The price situation
In the first half of June, wheat prices in the domestic market of Kazakhstan decreased by 100 – 1,000 tenge per ton. Barley is in a very wide price range, which indicates the occasional transactions in the market of this culture. Flour of top-grade, first- and second-rates fell in the regions by 450 – 2,000 tenge per ton.
The decrease is mainly due to external factors of the near the regional market, associated with a decrease in export demand from Kazakh importers who have already gathered good harvests of grain and gradually switch to the processing of their own wheat. For example, this year, growers in Uzbekistan got a record cereal harvest for the last three years – more than 7.61 million tons.
Last year’s grain harvest was much lower – 7.0261 million tons of grain, of which 6.5124 million tons was wheat. The growth of grain production in Uzbekistan tightens the potential export market for Kazakh of grain.
In the world markets in early July the price of wheat and corn, though grown up, but still is at a fairly low level – 250.2 U.S. dollars per ton, as of July 12, on the Chicago Board of Trade and $ 258 per ton in Paris on MATIF.
Results and export forecasts
While farmers are waiting for the new crop, the most far-sighted of them are already asking themselves – where and in what quantities they will sell the crop-2013, whatever the volume of it would be. A preliminary analysis of the potential of neighboring markets and opportunities for importers suggests that export opportunities are pretty poor.
About Uzbekistan, with its record harvest of grain this year, we have already mentioned above. This country has always shared with some other country first lines of the rankings of Kazakh grain importers; what will be this year is not clear yet. From year to year in this country is growing milling industry in parallel with the volume of wheat crops, and because of this we should not expect the growth of flour exports in this country.
We are concerned about a significant loss in the Uzbek direction. There really is a “sagging” of flour exports. Neither more nor less – by 45% compared with last year, said in comments to the IA “Kazakh-Zerno” the Head of the Millers and Processors Union of Kazakhstan Eugene Gan.
Good yields are expected in other countries to the south of Kazakhstan, as well as in Azerbaijan and Iran. Iran will seek to pay for grain money which is kept in foreign accounts for the previously delivered oil; but in Kazakhstan there is no this money, and Azerbaijan will import small volumes of high-class wheat to improve the baking properties of its own flour.
Kyrgyzstan has actually closed the road for Kazakh flour, citing the need to save the domestic milling industry from rampant Kazakh flour exports.
Whether the import of wheat from Russia this year will be the same as in the past season, it is not clear. Everything will depend on the amount of crop in the Siberian regions, on the Volga and in the Urals. South Russian wheat, most likely, will be exported.
From the closest major grain importers in the foreseeable space is China, which this year has such problem as defacing of grain. Chinese wheat crop suffered more than was previously estimated, from freeze in maturing period and from rain during harvest, Reuters reported. Analysts’ estimates suggest that damage to the fields in northern China could reach 20 million tons of crops – 16 percent – two times higher from the previously declared amount of wheat as unfit for consumption.
The USDA raised its forecast for China’s imports in the 2013/14 year to 8.5 million tons from 3.2 million in the previous year, making the price of U.S. wheat rose to a maximum of more than two weeks, and with renewed vigor fueled the talks of global food security.
Whether China will massively import Kazakh wheat in this situation? This hope still warms the souls of grain exporters, but past experience makes few occasions for this, although the export growth is evident. In 2011, the export of Kazakh grain to China, according to the JSC “Kazakhstan Temir Zholy”, amounted to 14 thousand tons, which is 4.4 times more than in 2010. In 2012, grain shipments to China came closer to 215.4 thousand tons. This year, shipments to China from Kazakhstan were very low.
For China it still is not quite profitable to haul wheat by continental paths through the Kazakhstan and China to the densely populated south-eastern and eastern regions of the Pacific Ocean. Less costly and more efficient is to ship wheat in huge volumes through the ports, through a well-established maritime transport infrastructure.
However, according to the latest forecast of the International Grains Council (IGC) in the 2012-13 MY Kazakhstan exported 7.1 million tons of grain, of which 6.8 million tons is wheat.
FAS USDA forecast is much more modest. Experts predict for Kazakhstan only 6.5 million tons of export shipments. But forecasts are subject to change in the early months of the season, when the situation will be clear with the volume and quality of the new crop, as well as the volumes of grain balance sheets for countries – export competitors.
On the current export now we can judge from the May figures. As previously reported, according to the statistical information of CTC, in May Kazakhstan shipped 138.9 thousand tons of wheat or rye flour, which corresponds to April volume – 138.8 thousand tons. It was shipped 264.1 thousand tons of wheat and meslin, totaling 65,483 thousand U.S. dollars, two million more than the April figures. For comparison, in April shipments of wheat totaled 236.2 thousand tons.
Over the past two weeks at the ETS Exchange were made 69 deals for wheat of 3 class. It was sold 270,236 tons, valued at 9,341,872,725 tenge. At last week from July 5 to July 12 at the ETS took place 29 transactions for wheat of 3 class. It was old 120,534 tons of wheat in the amount of 4,272,363,600 tenge, or 28,026,534.3 dollar. The average transaction price last week was $ 35,445.3 tenge per ton of wheat. Compared with the previous week the average price increased by 1,581.3 tenge per ton.
We recall, from July 1 to July 5 at the ETS took place 40 deals for wheat of 3 class. It was sold 149,702 tons of wheat in the amount of 5,069,509,125 tenge, or 33,341,046.2 dollars. The average transaction price last week was 33864 tenge per ton of wheat. Compared with the previous week the average price decreased by 4,532.3 tenge per ton.
At the ETS Exchange from June 14 to June 28 were made 84 deals for wheat of 3 class. From June 17 to June 21 at the ETS 44 transactions took place for wheat of 3 class. It was sold 422,692 tons of wheat in the amount of 17,394,130,550 tenge, or $114,616,014.14. The average transaction price last week was $41,150.8 tenge per ton of wheat. Compared with the previous week the average price increased by 5,652.3 tenge per ton.
At the last week from June 21 to June 28 at the ETS Exchange took place 40 deals for wheat of 3 class. It was sold 282,324 tons of wheat in the amount of 10,840,222,734 tenge, or $71,430,021.7. The average transaction price last week was $38,396.3 tenge per ton of wheat. Compared with the previous week the average price decreased by 2,754.4 tenge per ton.
As a result, during the first half of June in the sector of agricultural products at the ETS Exchange passed 84 deals for wheat of 3 class, as a result of which it was sold 705,016 tons of wheat in the amount of 28,234,353,284 tenge, or $186,046,035.84.
Currently, you can buy wheat of 3 class from new harvest in Astana for 33,100 tenge ($221.07; here and further is applied the exchange rate of National Bank of Kazakhstan on 07/19/2013) per ton. First-rate flour in the capital of our country costs 51,900 tenge ($348.05) per ton. Second-rate flour is sold by 48,300 tenge ($324.36) per ton. Flour of extra-class costs 54,300 tenge ($363.84) per ton.
A ton of wheat of 3 class can be purchased for 32,000 tenge ($213.83), wheat with gluten content above 27 percent – for 34,000 tenge per ton ($229.62), barley of a 2 class now costs 31,500 tenge ($211.86) per ton in Akmola region. Flour of extra class costs 52,000 tenge ($348.71), first- and second-rate flour is offered at 49,600 tenge ($332.92) and 45,500 tenge per ton ($305.94), respectively.
In the North Kazakhstan region wheat of 3 class is sold by 30,500 tenge ($203.96) per ton, wheat with gluten content above 27 percent – by 32,000 tenge ($215.15). The current price of barley is 28,500 tenge per ton ($192.12). In the North Kazakhstan the price of flour of extra class is 50,300 tenge per ton ($337.52), first-rate flour costs 47,600 tenge ($319.76) and second-rate flour costs 45,400 tenge per ton ($305.28).
In Kostanay region the price of wheat of 3 class rose to the level of 31,000 tenge per ton ($207.25). Wheat with gluten content above 27 percent is sold by 33,600 tenge ($224.36). The price of barley of 2 class is 26,300 tenge ($184.88) per ton. The market price of flour of all classes went down: extra class – to 49,800 tenge per ton ($334.23), first-rate – to 46,700 tenge ($313.84) and second-rate flour to 44,400 tenge ($289.7) per ton.
In Pavlodar region the price of wheat of 3 class is 34,000 tenge per ton, or $ 226.99 per ton. The price of barley is 30,400 tenge ($204.62) per ton. Flour of extra class costs 53,300 tenge ($357.26) per ton, first-rate flour costs 51,800 tenge ($347.39) per ton, second-rate flour costs 47,400 tenge ($318.44) per ton.
In Karaganda region wheat of 3 class costs 34,200 tenge ($229.62) per ton, wheat with gluten content above 27 percent costs 35,300 tenge ($236.86) per ton. The price of barley is 31,200 tenge ($209.88) per ton. In Karaganda, traders sell flour of all rates at the following prices: first-rate – 52,300 tenge ($350.68) per ton, second-rate –49,300 tenge ($330.94) per ton and extra class –54,800 tenge ($367.13) per ton.
Over the past period, the cost of wheat has decreased in the East and West Kazakhstan. In the East Kazakhstan region of the country the price of wheat of 3 class fixed at 37,000 tenge ($248.04) per ton, barley – 32,100 tenge per ton ($215.8). In the West of the country wheat of 3 class costs 35,000 tenge ($234.88). The cost of first-rate flour in East Kazakhstan is 52,100 tenge ($349.37) per ton, second-rate flour costs 47,500 tenge ($319.1), per ton, and flour of extra class – 54,800 tenge ($367.13) per ton. In the West Kazakhstan prices for flour are as follows: extra class costs 55,300 tenge ($370.42), first-rate – 51,900 tenge ($348.05), second- rate -49,000 tenge ($348.05) respectively.
In Almaty region the price of wheat of 3 class for today is offered by 35,100 tenge ($235.54) per ton. Barley of 2 class is sold by 31,000 tenge ($208.57) per ton. The cost of flour of extra class in this region is 55,900 tenge ($374.37) per ton, first-rate –53,400 tenge ($357.92) per ton, second-rate – 50,500 tenge ($338.84) per ton.
In Zhambyl region the price of wheat of 3 class for today costs 36,100 tenge ($242.12) per ton, barley of 2 class is sold by 34,800 tenge ($233.57) per ton. The cost of flour of extra class in this region is 56,200 tenge ($376.34) per ton, first-rate –53,600 tenge ($359.23) per ton, second-rate – 51,500 tenge ($345.42) per ton.
In the South Kazakhstan region wheat of 3 class is offered by 35,300 tenge ($235.54) per ton, barley – by 32,100 tenge ($215.8) per ton. The cost of flour of extra class in this region is 56,300 tenge ($377) per ton, first-rate – 53,100 tenge ($355.95) per ton, second-rate –48,900 tenge ($328.31) per ton.
In Aktobe region wheat of 3 class is offered by 33,300 ($223.7). Flour of extra class can be purchased for 57,700 tenge ($386.21) per ton, first-rate – 53,100 tenge ($355.95) per ton, second-rate – 50,800 tenge ($340.81) per ton.
In Kyzylorda region wheat of 3 class is sold currently at 34,100 tenge ($228.96) per ton. The cost of flour of extra class is 57,200 tenge ($382.92) per ton, first-rate – 54,400 tenge ($364.5) per ton and second-rate – 51,100 tenge ($342.79) per ton.
In the south capital, Almaty, you can buy wheat of 3 class by 35,000 ($233.57) per ton. Flour of extra class costs in Almaty 56,900 tenge ($380.95) per ton, first-rate – 53,900 ($361.21), and second-rate – 50,700 tenge ($340.15) per ton, respectively.
As you can see, the table of prices for Kazakhstanian wheat, barley and flour on export borders of the Republic is provided with a running start at 7-10 dollars. It is advised to add so much to the real price of exporters, taking into account new tariffs of Kaztemirtrans.
The cost of wheat of 3 class with gluten content of 23 percent on DAP terms at the station Lugovaya (Kazakhstan – Kyrgyzstan) is $262-271 per ton, with gluten content of 27-30 percent – $277-287 per ton. Barley costs $229-239 per ton. Flour of extra class is sold by $396-40; the cost of first-rate flour is $377-387 and the second-rate -$ 355-365 per ton.
At the elevators of the South Ural railway the current cost of wheat of 3 class is $225-235 per ton, wheat with gluten content above 27 percent – $242-252. The price of barley there is $197-202 per ton. Flour of extra class can be bought by $375-385; first-rate flour is $359-369 and the second-rate – $332-342 per ton.
At the station Sary-Agash (Kazakhstan – Uzbekistan, DAP) wheat of 3 class costs $266-276, wheat with gluten content above 27-30 percent – $285-295. The price of barley there is $235-245. Flour of extra class can be bought by $400-410, first-rate flour is $355-365 and the second-rate -$328-338 per ton.
At the station Tobol (DAP) wheat of 3 class costs $244-254, wheat with gluten content above 27-30 percent – $261-271. Barley is sold by $209-219 per ton. Flour of extra class can be bought by $383-393, first-rate flour is $367-375 and the second-rate -$348-358 per ton.
The average price of wheat of 3 class at the station Hajraton (Uzbekistan – Tajikistan, CPT) is $341-351 per ton; wheat with gluten content above 27-30 percent is sold by $342-351 per ton. Barley can be bought by $290-300 per ton. Flour of extra class is offered by $473-483, first-rate flour is $453-463 and the second-rate – $437-449 per ton.
In the port of Aktau on FOB conditions wheat is sold by $272-282, wheat with gluten content above 27-30 percent is sold at $291-301, barley – $247-257. Flour of extra class is sold by $422-432, first-rate flour – by $416-426 and second-rate – by $389-399 per ton.
Reference: 1 dollar = 152.82 tenge, 1 euro = 200.48 tenge, 1 ruble = 4.72 tenge, 1 som = 3.16 tenge, 1 pound sterling = 232.29 tenge, 1 hryvna = 18.65 tenge.