Kazakhstan looks like, Ukraine, to become an increasing force in wheat exports as 2011-11 progresses, despite transport costs which have hit $160 a tonne just to get grain to some ports.
The former Soviet Union country’s grain exports look set to rebound further than had been expected, to 8.3m tonnes, including 8.0m tonnes of wheat, US Department of Agriculture attaches in Astana, the Kazakh capital, said.
The USDA has an official estimate for Kazakh wheat exports of 7.5m tonnes, while Kazakhstan’s state-owned grain trader, the Food Contract Corporation, last week pegged total grain shipments at 8m tonnes.
On wheat, such a performance would represent a 48% rise year on year, and the country’s third-highest wheat exports ever.
The attaches said their forecast reflected tight supplies of high-protein milling wheat from other major suppliers – such as the European Union, where the German crop has been plagued by harvest rains – besides a decline in Kazakh prices still inflated by last year’s drought.
"Currently, Kazakh [wheat] prices are much higher than world market prices. But with the impending bumper crop, these will likely decline significantly in the next few months," the attaches said.
Logistical challenges
Kazakhstan has, thus far in 2011-12, failed to enjoy the uptick in shipments enjoyed by neighbour Russia, failing, for instance, to win any orders from Egypt, the top wheat importer, despite being an eligible supplier (unlike Ukraine).
Egypt has purchased more than 1.5m tonnes of Russian wheat since the season started at the beginning of July.
However, shipments from Kazakhstan, a land-locked country, face the hurdle of high transport charges to port, which can exceed the price of the grain if taken to Russian or Ukrainian Black Sea ports, and are currently at up to $160 a tonne.
"In addition, in years such as this, when Ukraine and Russia are experiencing bumper crops, it makes it much more difficult to obtain quotas for these Black Sea ports," the attaches added.
Kazakhstan is attempting to overcome this obstacle by investing in Baltic Sea ports, to which transport is less expensive, besides subsidising shipments, and raising rail-handled exports to neighbouring China.
‘Near ideal season’
The attaches pegged Kazakhstan’s grain harvest at 19.2m tonnes, a rebound of 60% from last year’s drought-hit levels, helped by a "near ideal" growing season,
The wheat harvest, of which nearly all is of spring varieties, is seen rising 65% to 16.0m tonnes.
"The only remaining concern for the crop is whether early cold weather or excess rain before or during harvest will affect quality," the attaches said.
Ukraine is expected by many private observers to reveal a rain-damaged harvest, although it is a VAT regime and export duties, both of which are under review, which are being blamed for a slow start to the country’s exports in 2011-12.
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