A massive increase of the production
The Russian wheat production has increased considerably by +91 % from 2006 to 2017 to reach almost 86 million tons. In a logical way, the Russian export potential has also increased by +280 % in the last ten years. The first explanation for these bumper crops is the rise of the winter wheat area in the country but also the increase in yields which remain three times higher than for spring wheat varieties. The second reason is that the climate was mostly favorable from 2013 to grow such a big crop. Thirdly, as we already observed during the European Agritel Crop Tour in Russia, investments from farmers were substantial during the past few years improving technologies, genetics and mechanization in farms.
A geostrategic advantage
The Black Sea region is the first wheat exporter in the world. In 2017, grain exports from this region reached 100 Mt! There is a large panel of different qualities from high-protein wheat with more than 13 % to more usual milling wheat varieties with 11.5 % protein content. The geostrategic location of the Black Sea is a strong advantage for the region, allowing it to export to neighboring countries such as Egypt, first wheat importer in the world. They also have the possibility to export to Asia, where there is a great deal of importing nations such as Indonesia, Bangladesh, etc.
The influence on prices
As shown on the upper graph, the deviation from the trend of the Russian wheat production is highly influencing wheat prices. Taking the example of 2010, the Russian wheat production was displayed -32 % below 2009 leading the Russian government to instore an export ban to protect the internal market. International prices went up by +100 % on Euronext during the summer of 2010. In 2012, prices increased also because of a strong drop of the Russian wheat export potential.
Thus, the European Agritel Crop Tour has been created to avoid surprises from the Black Sea region and to anticipate the production potential before the harvest. It allows operators to improve their trade decisions thanks to the reliability of our estimates.