Loads of grain at the Kazakh port of Aktau. Photo: Silos Cordoba

There is nothing like a drought, a global pandemic, artificial trade barriers and an outraged neighbor to disrupt trade flows. While Kazakhstan will undoubtedly have enough wheat to meet its domestic needs in MY 2021-22, the picture of grain imports and exports, especially wheat, is opaque at best.

Harvesting of this season’s winter crops in Kazakhstan is nearing completion, a dry seedbed at planting followed by an unusually hot and dry growing season and numerous dust storms have resulted in below average yields. but above average grain quality in most areas.

Kazakh farmers had harvested 15.8 million hectares (Mha), or 99.7% of the harvested area expected to October 22. The Ministry of Agriculture reported that 16.1 million tonnes (Mt) of grains and pulses were harvested with an average yield of 1.02 t / ha.

USDA’s October global agricultural supply and demand estimates put Kazakhstan’s 2021-22 wheat production at 12 Mt, down from its September forecast of 12.5 Mt, or near 16% less than the 2020-2021 wheat production estimate of 14,256 Mt. Harvested area is expected to be 12.7 Mha, the average yield of around 0.94 t / ha.

Sub-optimal start

The season got off to a bad start with an unusually low soil moisture profile, forcing growers to plant deeper than usual in many areas. This resulted in late and irregular emergence in many fields. High temperatures and low rainfall in June resulted in poor tillering, weak plants and abbreviated stem elongation.

While the result was much lower year-over-year production, 90% of the wheat harvested was food grade, up from 83% last year. The volume of high protein wheat with a gluten content exceeding 28 pc was 74 pc, up significantly from 60 pc in 2020.

USDA estimated Kazakhstan barley production at 2.5 Mt in this month’s WASDE update, unchanged from its September figure but 31.7% lower than 2020-21 production of 3.659 Mt. The harvest area is expected to be 2.2 million hectares, bringing the yield to 1.14 metric tons per hectare.

Like wheat, barley production was hampered by a low soil moisture profile for most of the growing season, with late planted crops performing the best. The practice of ‘fixing the snow’ or piling snow in ridges along the top end of enclosures so that it melts and drains into freshly sown fields has pushed yields up to two metric tonnes. per hectare in some districts of Akmola oblast in the north of the country.

Domestic wheat consumption is estimated at 6.3Mt for the 2021-22 marketing year, against 6.25Mt in 2020-21. Food, seed and industrial use is expected to remain unchanged year-on-year at 4.8 Mt, with the balance of 1.5 Mt going to the animal feed sector, up from 1.45 Mt last season .

On the barley side, total domestic consumption is estimated at 2.1 Mt. At 1.8 Mt, the feed sector is the main consumer in Kazakhstan, especially the poultry industry. An additional 300,000 t is used for food, seeds and industry, with malt production for the beer industry being a key end use.

Lower production means lower exports to ensure the satisfaction of domestic demand. The Kazakh government has resisted calls from the flour milling industry to introduce export duties on wheat in an attempt to limit exports and lower domestic prices. Nevertheless, Russian imports will certainly be needed to meet export forecasts.

According to the USDA, wheat exports will reach 7.4 Mt in MY 2021-22, based on imports from Russia of 800,000 t. Much of these imports will come from Siberia, where the costs of shipping across the border to Kazakhstan are significantly lower than those of trucking to Black Sea or far eastern ports.

However, the USDA export estimate is much higher than the local government and Foreign Agricultural Service forecast of around 6.5 million tonnes, both based on imports from Russia of around 1. million tons. But that number of imports is eclipsed by the estimate of 2 million tonnes from the leading agricultural consultancy, Sovecon.

Distortions

The introduction of the Russian export tax undoubtedly increased cross-border trade between Russia and Kazakhstan, but it also led to large-scale underreporting of grain movements. There is no requirement for trade within the Eurasian Economic Union (EAEU) to be inspected or weighed when crossing borders, and several Russian news agencies say wheat exports to Kazakhstan could exceed 4 million tonnes this season. This led to the recent announcement of plans to inspect and weigh grain shipments passing through the Russian-Kazakhstan border.

There is nothing like a drought, a global pandemic, artificial trade barriers and an outraged neighbor to disrupt trade flows.

Taking the USDA import figure of 1 Mt means that there is potentially an additional 3 Mt of Russian ‘duty free’ wheat that could be ‘officially’ exported out of Kazakhstan as whole grains or flour to traditional trading partners. of the region. Uzbekistan, which had its own harvest 8% below the five-year average, has traditionally been the country’s largest wheat export customer. It is expected to import 3.5 million tonnes during the current marketing year, up 20% from the five-year average. It also grinds Kazakh wheat for re-export to Afghanistan.

Afghanistan is generally the second-largest customer, but despite government assurances, clearing financial transactions is a big concern under the recently established Taliban regime. Tajikistan and Iran, which we know have above-normal import requirements this year due to domestic drought, are other likely destinations.

China shares a 1,783-kilometer border with Kazakhstan and is a key emerging market for Central Asia’s largest grain producer. However, China’s persistent limits on rail and road transport across the Kazakhstan-China border and unilateral COVID-19 quarantine restrictions on inbound trade frustrate the Kazakh government.

In August, Kazakhstan’s railway authority reportedly announced restrictions on the acceptance of goods bound for the Chinese border, except for containerized shipments through the new transshipment terminal at the Dostyk-Alashankou border post. This dramatically increases export costs, not to mention the global shortage of containers for these purposes.

There is nothing like a drought, a global pandemic, artificial trade barriers and an outraged neighbor to disrupt trade flows. While Kazakhstan will undoubtedly have enough wheat to meet its domestic needs in MY 2021-22, the picture of grain imports and exports, especially wheat, is opaque at best.

Grain Central: Get our daily crop news for free straight to your inbox – Click here


Source link

Leave a Reply

Your email address will not be published.