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Russia Agribusiness Report Q3 2010
Business Monitor International, May 2010, Pages: 71
The Russia Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Russia's agribusiness service.
BMI View: The Russian drive for food security was formalised in January when President Medvedev signed the 'Food Security Doctrine', which aims to see the country reach 85% self-sufficiency in meat and poultry by 2020. We continue to be impressed by the seriousness with which the government is pursuing the goal. We forecast self-sufficiency in poultry to be reached in 2013. Nevertheless, the tools Russia is using to achieve such goals include aggressive slashes in import quotas. This year US pork quotas were cut 43% from 100,000 to 57,000 tonnes. We expect demand will suffer as prices rise and forecast a decline in pork consumption for 2010.
Less favourable weather means grain harvests for 2009/10 expected to fall across the board following bumper 2008/09 season. Wheat to fall 4.0% year-on-year to 61.1mn tonnes, corn to plummet 33% to 4.44mn tonnes, barley to drop 26% to 17.1mn tonnes.
Milk consumption forecast for 2010 revised upwards with improving Russian economy, which we now expect to grow 4.0% over the year. A slight year-on-year gain in milk consumption is expected, with the figure remaining around 12.1mn tonnes.
Balance of trade in goods expected to rise from US$303.3bn in 2009 to a forecast US$364.0bn in 2010. Russia is aiming for an aggressive expansion of wheat exports to Asia. With quality perception a challenge, BMI believes it is likely to focus initially on more price sensitive South East Asian markets such as Indonesia, Vietnam and Malaysia. Russia plans to ship 1mn tonnes of wheat to the region in 2010. Labelling laws requiring milk made with milk powder to be called 'milk drink' are causing trouble for milk processors. Market leader Wimm Bill Dann saw its profits drop to one-third of 2008 levels in 2009. The US-Russian trade dispute over poultry exports may soon be at an end. US producers are expected to stop using the chlorine washes which caused the ban, with exports expected to resume thereafter. Yet while US producers remain outlawed, their Russian counterparts should continue to benefit. The length of time it takes for exports to resume poses a risk to our production forecasts.
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