Russia to expand wheat exports to Asia on higher production
The Dollar Business Bureau
Russia, the world’s largest exporter of wheat, is about to expand its market for grain in the fast-growing Asian economies, which normally import their grain requirements from other parts of the world.
Russia is poised to grab more share in markets of Indonesia, China and Japan as drought conditions in countries like Australia, Canada and the US are eroding the wheat production. These countries are the dominant exporters of wheat to Asian countries, accounting for around one-third of the global imports.
While wheat shipments from Russia were estimated to surpass those of any other nations, very little is usually shipped to Asia, where wheat imports have nearly doubled in last 10 years as rising incomes pushed up demand for bread, noodles and cakes.
However, in the current season, wheat production in Australia will drop the most in a decade, Canada’s production will decline for the third time in the last four years and farmers in the US will have their lowest yield since 2002.
According to the US Department of Agriculture (USDA), wheat production in Russia will increase to 77.5 million metric tonnes, more than the domestic consumption by the broadest margin on record.
For decades, the US had been the top wheat exporter in the world, but was replaced by Russia in 2015-16 again taking the position last season.
As per the USDA estimates, Russia will again take the top place in the marketing season that started on July 1, with exports surging 13% compared to a year ago to 31.5 million tonnes, nearly three-fold as compared to 2012-13.
Russian shipments of wheat to south, east and Southeast Asia jumped 60% to 3 million tonnes in 2016-17, according to the consulting agency UkrAgroConsult. However, this is still make up for just 5% of the region’s overall imports.
On the other hand, Australia, Canada and the US shipped almost all of wheat imports of Japan in the last few years and around three-fourth of Indonesia’s wheat purchases of 10 million tonnes in the last season, as per the USDA.
China purchased around a third of its wheat imports from the US.