MOSCOW: Russian farmers may find it less attractive to sow spring wheat this year as the profitability of this business has declined compared with the previous season due a stronger national currency, the head of a non-government farmers’ lobby group said. Russian grain exports have been running behind initial expectations so far this 2016/17 marketing year, which started on July 1, due to the strengthening of the rouble currency against the dollar and despite a record grain crop of 119 million tonnes. [nL8N1G50WO] “The profitability for wheat (sowing) has declined quite sharply,” Russian Grain Union chairman Arkady Zlochevsky told a briefing in Moscow on Wednesday.
The rouble <RUBUTSTN=MCX> has risen 6 percent against the dollar so far in 2017 due to higher oil prices, making Russian commodities less competitive on global dollar-denominated markets. Farmers may start selling wheat from their stockpiles more actively this spring to get funds for the spring grain sowing campaign. Together with Russia’s high market stocks and slow exports, the intensified supply might lead to a fall in domestic prices and hit the sowing campaign, Zlochevsky said. Starting in March, farmers plan to sow spring grains this year on 31.0 million hectares, down 200,000 hectares from a year ago, the agriculture ministry has said.
Zlochevsky said it was too early to say whether farmers would fail to reach the ministry’s estimate. Stormy weather in ports along with the strong rouble has hit Russia’s grain exports in February, Zlochevsky said. He expects the country to send 2.8 million tonnes of grain from its ports in March, compared with 2.0 million tonnes this month. The average cost of wheat production for Russian farmers is currently at about 7,000-7,500 roubles ($121-130) per tonne, up from 6,000-6,800 roubles per tonne a year ago, according to Zlochevsky. “It makes (spring) sowing less attractive,” he said. Domestic prices for fourth-class wheat, excluding delivery costs, were at 9,050 roubles a tonne in the European part of Russia at the end of last week, according to SovEcon. [nL8N1G51MH] The country’s winter grain sowings are doing well so far thanks to deep snow in the main producing regions, Zlochevsky said. Russian farmers last autumn sowed winter grains on 17.4 million hectares for the 2017 crop, up from 16.3 million hectares the year before.
