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. Last Updated: 07/27/2016

Another Bumper Crop for CIS States

MTLower domestic prices have made Russian grain more competitive internationally.
Russia, Ukraine and Kazakhstan, the top grain producers in the Commonwealth of Independent States, will have high harvests and large exportable surpluses for the second year in a row, analysts said.

They will continue flooding their main export markets, mainly with wheat, but may also try tapping new ones such as Iran, where their interests may clash, they said.

"All three countries will have good grain harvests, slightly lower than last year, but above the average," said Andrei Sizov of leading Russian agricultural analysts SovEcon. "Competition between Russia and Ukraine will continue on their main export markets -- the Mediterranean, North Africa, the Middle East and southern Europe, while Russia and Kazakhstan may start fighting for Iran."

Russia's official 2002 grain crop forecast is 73 million to 76 million tons, down from 85 million tons last year. Some analysts believe the true total will be higher, but estimates differ.

Andrei Chernyshov, head of research at major Russian agricultural firm Rusagrocapital, put it at 84 million tons, while SovEcon's Sizov estimates it at around 80 million tons.

Ukrainian Agriculture Minister Serhiy Ryzhuk raised the country's 2002 grain forecast last month to 35.5 million tons from 32.5 million tons previously. In 2001 the country harvested a record 39.7 million tons.

Ukrainian analysts say net grain production will be about 35 million tons this year. But Chernyshov said the crop could well be close to last year's level, while SovEcon's Sizov estimated it at 32 million to 33 million tons.

Kazakhstan in June forecast the harvest at 12 million to 13 million tons, down from 15.9 million tons last year.

Chernyshov said Kazakhstan could harvest 13.5 million tons, while Sizov sees it up to 14 million tons.

Analysts see export prospects for all three states as better than last year, as lower crops expected from Argentina, the United States, Canada and Australia were likely to boost demand.

Kazakhstan's main export markets last year were CIS countries, Iran and Afghanistan. Its exports to Uzbekistan are expected to shrink this season after Tashkent announced a record crop of 5.34 million tons, up from 3.99 million tons in 2001.

"With falling Uzbek demand, Kazakhs will be fighting for Iran, where they will meet Russians," Sizov said.

He said Russian firms planned to ship grain from the Caspian ports of Astrakhan and Makhachkala to enter the Iranian market.

Agriculture Minister Alexei Gordeyev said this week that Russia may export 5 million to 6 million tons in the 2002-03 agricultural year, unchanged from last year.

SovEcon forecasts Russian grain exports this season at 6 million tons, close to last season's 6.2 million, while Chernyshov sees a rise to 8 million or 9 million tons.

Sizov said that lower domestic prices have made Russian grain more competitive. Russia could export to Iraq, which said last month it would halve wheat imports from Australia in response to support for U.S. strikes against Baghdad, he said.

"If the threat materializes, Russia may be able to supply up to 200,000 tons of wheat to Iraq," Sizov said.

Chernyshov said Brazil had expressed interest in buying Russian wheat, as it had problems with imports from its main supplier, Argentina.

But Sizov called such prospects "rather exotic" because of strict Brazilian import controls and stringent standards demanded by Brazilian millers on imported grain.