New threats to the russian agricultural sector

According to the Agriculture Ministry of russia, as of September 30, more than 140 M mt of grains (101.9 M mt of wheat, 23.9 M mt of barley, and 2.1 M mt of corn) were harvested. Average grain yield is almost 30% higher than last year.

It is very likely these numbers are overestimated and the actual crop will be much lower. In addition, the weather in russia was favorable during most of the growing season indeed. So, we do not ignore the official harvest data. This is why UkrAgroConsult raises its grain crop estimates for russia.

Poor exports amid a bumper harvest lead to grain oversupply in the domestic market and consequently to a drop in prices. Moreover, farmers’ profits are falling thanks to growing prices of plant protection products, spare parts and new agricultural machinery (including imported machinery and spare parts).

As the harvest progresses, russian farmers face another issue: the existing storage capacities may turn out to be insufficient in view of record harvest estimates. Market participants already report that silo in some regions are full with grains to be stored on the barn floor. This deteriorates the quality of such grains even greater. Higher losses of russia’s 2022 grain crop are highly probable.