* Kazakhstan forecasts 2012 grain crop of 14 mln tonnes
* Drought situation "alarming", says deputy minister
* Carryover stocks, higher prices to offset losses
* 2012-13 grain exports forecast at 10 mln tonnes
(Adds exports, carryover stocks, China)
By Raushan Nurshayeva
YESIL-AGRO FARM, Kazakhstan, July 17 Kazakhstan
expects a below-average crop this year due to an "alarming"
drought across its northern grain belt, although carryover
stocks from last year's record harvest should allow the country
to remain a top-10 global wheat exporter.
Deputy Agriculture Minister Muslim Umiryayev forecast on
Tuesday that hot and dry weather would cut Kazakhstan's grain
crop to 14 million tonnes this year, a decline of 48 percent on
last year's post-Soviet record and undershooting the average of
17 million tonnes over the last nine years.
"The situation is alarming," Umiryayev told reporters at the
Yesil-Agro farm in Akmola region, north of the capital Astana.
"Our main grain-growing regions will not have the record crop of
Kazakhstan's 16.7 million people consume about 2.5 million
tonnes of grain per year and domestic food supplies are not
threatened by the drought, although the country will have to dig
into its reserves to maintain its status as a major world
Kazakhstan, Central Asia's largest economy, harvested 27
million tonnes of grain last year, its biggest crop in 20 years
of independence from the Soviet Union. The country is a major
supplier to neighbouring former Soviet Central Asian states, as
well as Afghanistan and Iran.
The country has sown 16.2 million hectares to grain this
year, an area about the size of Tunisia. Crops have been damaged
or are in poor condition on nearly 10 percent of this area, the
Agriculture Ministry said in a statement.
The ministry's latest data show that 36.5 percent of the
total sown area was in "good condition" as of July 12 and 53.7
percent was in "satisfactory condition".
Three northern provinces - Akmola, Kostanai and North
Kazakhstan - account for around three quarters of the sown area.
In Kostanai region alone, crops are in poor condition on nearly
a quarter of the sown area.
"The situation in the fields is worsening every day," Nuraly
Saduakasov, governor of the Kostanai region, said in comments
reported on Monday on local government website www.kostanay.gov.
"Weather forecasters say the drought will affect not only
Kostanai, but also North Kazakhstan and Akmola regions," said
Umiryayev. "We will be able to make a more detailed forecast
within the first 10 days of August."
But as he spoke, a few spots of rain fell on the wheat
fields. He said more rain was forecast by the end of this week.
The deputy minister said carryover stocks from the record
crop of 2011, as well as higher global grain prices, would help
to offset any losses from a shortfall in production.
European milling wheat futures hit new contract highs when
markets opened on Tuesday, as U.S. markets extended their rise
on weather concerns. Benchmark November on the
Paris-based milling wheat futures <0#BL2:> briefly hit a
contract high of 269.00 euros per tonne.
Umiryayev forecast Kazakh grain exports in the marketing
year to June 30, 2013, at 10 million tonnes. The country
exported 12.1 million tonnes of grain, including grain in flour
equivalent, in the marketing year to June 30, 2012.
Kazakhstan's grain export potential in the season just ended
had been around 15 million tonnes, Umiryayev said. The ministry
said Kazakhstan's elevators held 8.2 million tonnes of grain as
of July 1, using nearly 58 percent of their capacity.
"Whatever we lose in yield will be balanced in part by
prices," Umiryayev said. "When we add the forecast crop to
carryover stocks, then grain availability will balance itself
out this year."
The ministry said domestic prices for third-grade milling
wheat averaged $155 per tonne in the first 10 days of July, up
from $124 per tonne in January.
With prices rising, the ministry said it would consider
removing from Aug. 1 an export subsidy of 4,000 tenge ($26.7)
per tonne toward the cost of delivering grain by rail to ports
on the Black Sea and Baltic Sea.
Umiryayev said Kazakhstan also planned to supply more grain
by rail across its eastern border to China. The country exported
160,000 tonnes to China in the marketing year just ended,
compared with a meagre 4,000 tonnes in the previous 12 months.
"We have had negotiations with Beijing on the basic question
of quarantine requirements and have taken some steps forward in
this direction," he said. "We hope to preserve this dynamic,
because our Chinese partners are showing interest in our grain."
Asylbek Ismagambetov, general director of the privately
owned Yesil-Agro farm, said Chinese buyers had contacted him via
the Internet and travelled from Beijing to his farm.
"We signed a contract for 10,000 tonnes. They saw our
elevator. They saw the quality of our flour and we sent a test
shipment," he said.
(Writing by Robin Paxton; editing by Alison Birrane and Keiron