|
|
 |
|
Viewing report
|
|
|
|
Russia Agribusiness Report Q1 2012
Business Monitor International, Nov 2011, Pages: 65
Business Monitor International's 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: Russia ended its grain export ban on July 1 2011 on a bumper grains crop, which should significantly loosen supply on global wheat markets and help prices to moderate. Indeed, developments in H211 suggest a promising picture in terms of strong exports, and BMI do not expect large importers such as Egypt to experience difficulty finding grains supply on markets in 2011/12. This should help Russia to retake its place as one of the world's largest wheat exporters. In line with this, BMI see the Russian livestock sector recovering quickly as feed prices have moderated and government support to the sector continues.
Key Forecasts
- Wheat production growth to 2015/16: Expected growth of 75.2% to 72.7mn tonnes as yield gains and better access to export markets in Asia boost wheat production in the medium term.
- Corn consumption growth to 2015/16: Expected growth of 44.0% to 6.5 tonnes owing to the expansion of the livestock industry, especially poultry, and resulting demand for feed.
- Poultry production growth to 2015/16: Expected growth of 81.4% to 4.6mn tonnes. This should come on strong domestic demand and government initiatives to ensure a domestic production surplus. Specifically, the government is implementing programmes to improve the country's slaughter and processing capabilities.
- 2012 real GDP growth: 3.2% (down from 3.3% in 2011; predicted to average 4.2% from 2011- 2016).
- Food price inflation: 6.4% in September 2011 (down from 8.7% in September 2010).
Industry Developments
BMI believes that the halting of Russian grain exports due to railway constraints was meant to be temporary as backlogs eased. However, there appears to be little appetite for significant investment in the country's freight rail sector over the medium term despite ongoing efforts towards privatisation. Global grain importers are already aware of the problems with Russian transport, and wheat prices have barely reacted to the news. Over the longer term, however, deterioration in the export supply chain could lead to temporary tightness in the market, increasing volatility of wheat prices.
Cherkizovo announced strong H111 results on September 14 2011, which proves its ability to be profitable in a challenging environment. Indeed, the company posted stronger margins than in H110 and decreased its cost of debt. It also posted an 11% decrease in net income, which shows that it is still struggling to maintain output in the wake of high feed prices squeezing farmer margins. However, BMI see these challenges loosening in the medium term as Russia's strong grains output in 2011/12 helps feed prices to moderate. This will in turn significantly reduce livestock producers' costs. BMI also view the government's renewed support for the industry as likely to boost domestic meat.
In response to complaints from Russia's National Union of Milk Producers, the Ministry of Agriculture negotiated new terms for its bilateral trade agreement with Belarus. Indeed, the country's dairy markets became flooded with cheap products from neighbouring Belarus, whose currency was recently devalued by 70%. Because of the inability of Russia to compete with Belarus on dairy products prices, both countries' ministries announced new measures to regulate market, coordinating indicative prices for dairy products on a weekly basis and monitoring changes in supply/demand forecast in the medium term. The new measures also will prevent exports of dairy products to Russia at prices deviating from indicative prices.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
