Country News
China: The drought in Central China is expected to have a limited impact on national corn output due to higher overall planted acreage offsetting the crop damage, according to Reuters. High domestic supplies following four straight years of record harvests will likely preclude China from going abroad to purchase grain. China has already cut corn imports by 10 percent this year. While the drought is having little effect on corn output, it is expected to put a dent in China’s barley crop.
Kazakhstan: Central Asia’s largest grain producer is set to lower exports this year in anticipation of a smaller harvest, reports Reuters. Poor weather in the country’s main northern growing regions are the primary culprit for the reduction. So far this year the country’s Food Contract Corporation has exported 453,000 MT of grain, 430,000 MT of which has gone to Iran. Kazakhstan exported 8.7 MMT of the 18.2 MMT of grain that farmers harvested in 2013/14.
Russia: The cost of borrowing has risen significantly for Russian farmers and is driving a rush in grain exports to cover bank loans, according to Reuters. Russian farmers rely heavily on loans to finance themselves, however the rush to sell may cause more harm than good given that it could drive global grain prices down even further from their current four-year lows. The government rushed to the aid of farmers during the financial crisis of 2008 and 2010’s drought, however Western sanctions are taking their toll on the Russian economy and will likely limit Moscow’s ability to provide assistance. Further, Sberbank and the Russian Agricultural Bank, two of the country’s largest farm creditors, have been sanctioned by the EU, which prevents them from accessing its capital markets. The Russian Agricultural Bank has also been sanctioned by the U.S.
Russia’s Central Bank has reported that debt in the agriculture and hunting sectors had as of July 1 grown to 1.27 trillion rubles, up from the 1.24 trillion rubles reported in January. Interest rates on agricultural loans are also up an additional 3-4 percent from the 12-14 percent rates seen in January.
South Africa: Corn prices in the continent’s largest producer have fallen for the second week in a row on the expectation of the largest harvest in 33 years, reports Bloomberg News. Yellow corn prices dropped 3 percent to total $176/MT. South Africa is expected to produce 14.1 MMT of corn this year.
Ukraine: Ukraine’s agricultural minister, Ihor Shvaika, has announced that the 2014 grain harvest could exceed 63 MMT, according to Reuters. Analysts had previously forecast that Ukraine would bring in 59-61 MMT of grain, and UkrAgroConsult raised its forecast this week to 58.5 MMT.