by Valentina Shustova, US Wheat Associates marketing specialist, Russia

RUSSIA

Preliminary forecasts of Russian wheat production in market year 2006/07 vary from 38 to 42 million metric tons, compared to 47.7 MMT in 2005/06. The forecasts of reduced production are based on lower planted area and a larger percentage of poor crops in some production areas. The winter wheat crop is expected to be 19 to 21 MMT, compared to 28.9 MMT in 2005/06. Winter wheat accounts for about 60 percent of the Russian wheat production and largely contributes to the production fluctuations.

Despite the overall projected reduction of the wheat crop, Russia is likely to continue aggressive exports in the beginning of the new marketing year, due to a better than previously expected forecast for the winter wheat production in the southern export oriented areas and adequate carry-in stocks. Analysts note the regional and seasonal character of the Russian wheat exports which prevail in August through October, which often do not conform to the domestic supply and demand.

Since 2001 Russia has exhibited swings in wheat exports, from the record 12.6 MMT in 2002/03, sinking to 3.1 MMT in 2003/04. 2005/06 exports are expected to total 10 MMT. Lower production and anticipated growth in demand will likely reduce Russian 2006/07 wheat export potential to 4 or 5 MMT.

UKRAINE

Ukrainian wheat production is more susceptible to swings, as about 95 percent of the Ukrainian wheat crop is winter wheat -- which is highly dependant on weather conditions. Thus, in 2003/04 the Ukraine wheat crop shrunk to 3.6 MMT and Ukraine had to import about 3.5 MMT of wheat and flour. Analysts project that in 2006/07 Ukraine wheat production will drop to 10 to 11 MMT, compared to 17.9 MMT in MY 04/05. The reduced production in Ukraine is due to less favorable weather conditions and reduced sown area. (An earlier, more pessimistic, forecast was revised slightly upwards as effects from drought and winterkill are likely to be less severe than originally anticipated).

In the last five years Ukraine average wheat exports amount to about 4.5 to 5.0 MMT, and are expected to reach 5.2 MMT in the current marketing year. Despite the expected 40 percent drop in production, analysts do not expect that Ukraine will become a net wheat importer this year, although wheat exports are likely to drop significantly. Analysts predict that wheat exports, presumably of feed wheat, could barely exceed 0.5 to 0.7 MMT. On the other hand, barley and corn exports are expected to grow. Imports of higher quality food wheat are projected at about 0.3 MMT, presumably from Russia.

KAZAKHSTAN

Unlike Russia and Ukraine, Kazakhstan is expected to boost wheat exports from 2.6 MMT in 2005/06 to 3.5 to 4.0 MMT in the next marketing year. Due to sufficient wheat supply in the major exports destination of Kazakh wheat and because of competition with Russian wheat in the other FSU markets, Kazakhstan was not able to achieve their targeted 4 MMT wheat exports for two consecutive seasons. Despite the expected slight reduction in wheat area, analysts forecast this year's Kazakh wheat crop at 11 to 12 MMT.