Russia’s wheat harvest received a double upgrade within minutes when the International Grains Council hiked its estimate by nearly 6m tonnes – only to be eclipsed by SovEcon, which reported a 100m-tonne crop.

The IGC lifted its estimate for Russia’s wheat crop by 5.8m tonnes to 93.4m tonnes – overtaking the 92.0m tonnes pencilled in by the US Department of Agriculture, which many investors look to as the global benchmark.

However, the IGC was trumped minutes later by SovEcon, the respected Black Sea-focused analysis group, which upgraded its own estimate by 5.3m tonnes to 100m tonnes.

This figure, if confirmed, would leave Russia among the few producers to achieve a harvest of 100m tonnes or more – China, the European Union and India being the others.

Harvest vs exports

The crop “is to exceed the previous record of 86.0m tonnes [set in 2020] by 14m tonnes thanks to almost ideal weather for winter wheat and good weather for spring wheat”, said Andrey Sizov, the SovEcon managing director.

However, he acknowledged that the strong production record has not been matched by exports, which SovEcon forecasts will total 10.2m tonnes in the July-to-September period, 14% below the five-year average for the first three months of the marketing year.

“The export campaign continues to lag badly compared to the average pace,” he said.

Reasons which investors have cited for the sluggish pace of exports include Russia’s export tax and the firmness of the rouble, which has been supported by purchases of the country’s energy exports.

Also, there is perceived some disadvantage from the Western condemnation of, and sanctions against, Russia for its invasion of Ukraine, with some talk of sub-par wheat quality too.

Stocks impact

The IGC, while upgrading its forecast for Russia’s wheat harvest to a level up 18.4m tonnes year on year, left its forecast for 2022-23 exports unchanged at 36.6m tonnes – a result which would represent only a 3.5m-tonne improvement from last season.

The extra production was instead seen swelling Russia’s inventories to 22.5m tonnes – meaning a near-doubling in the stockpile year on year.

This expansion was reflected in turn in an upgrade of 10.7m tonnes to a record 285.6m tonnes in the forecast for world wheat inventories as of the close of this season.

‘Sustained deterioration’

By contrast, the IGC lowered by 2.6m tonnes to 262.1m tonnes its forecast for world corn stocks as of the close of 2022-23, reflecting reduced expectations for the ongoing US harvest.

The intergovernmental group, noting a “sustained deterioration in production prospects”, downgraded its forecast for the US crop by 12.5m tonnes to 354.2m tonnes, in line with the USDA’s estimate.

The EU crop was also downgraded, again – this time by 3.4m tonnes to 56.2m tonnes.