MOSCOW - Major wheat exporter Russia is likely to harvest a big crop this summer, intensifying competition in an already oversupplied global market which is expected to start the 2016/17 season with record stocks.
Russia began this year's spring grain sowing campaign two weeks earlier than usual and, if the weather continues to be favorable, its grain crop will top 100 million metric tons.
"Competition with European suppliers will be tough, especially with France," said Andrey Sizov, the head of SovEcon agriculture consultancy.
Russia also competes with Ukraine and Romania for markets in North Africa and the Middle East.
Global wheat prices are near 5-1/2 year lows due to favorable crop prospects in many regions and large stocks.
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The U.S. Department of Agriculture expects a record amount of wheat to be carried forward to the upcoming 2016/17 season which begins on July 1.
Under the current plan, Russian farmers will sow spring grains and pulses on 31.1 million hectares, down 1.5 percent from a year ago. This area will be added to the bulk of 16.4 million hectares sown with winter grains during last dry autumn.
Consultancy SovEcon estimates that about 7 to 9 percent of winter grains are in poor condition after the warm winter, down from 11 percent in November.
SovEcon expects the 2016 grain crop at 100 million to 105 million metric tons, compared with 100 million seen in December. The wheat harvest may total 59 million to 62 million metric tons.
If this scenario is realized, between 30 million and 33 million metric tons of grain will be available for export, including 23 million to 25 million metric tons of wheat, in the 2016/17 marketing year, SovEcon added.
Grain exports in 2015/16 are expected at 30 million metric tons.
Four months before the start of the new season, Russian wheat prices are not fully competitive and top buyer Egypt opted for supplies from Romania and Ukraine at a tender on Wednesday.
It is also unclear, to what extent farmers are able to decrease their prices as the rouble's fall against the dollar by around 54 percent since mid-2014 has inflated their costs for borrowing, imported seeds and fertilizers.
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However, the rouble is strengthening and prices for Russian wheat should decline in the coming months as farmers will have to get rid of the bulk of their stocks before the start of the new season, Sizov said.
