Heat damage to Russia crop past worst, official says

MOSCOW (Reuters) - Russia’s worst drought for decades is set to drag on for at least the next 7 days in some areas but further serious damage to grain crops is not expected, a senior government weather forecaster said on Thursday.

Drought in some regions of Russia, one of the world’s biggest wheat exporters, has sent global prices soaring to year highs in July, putting U.S. wheat futures on track for their biggest monthly gain since 1973.

Grain traders say the rally shows signs of continuing, although analysts observed stocks built up over the last two years of the largest global wheat harvests in history should ensure sufficient supplies.

The International Grains Council confirmed the impact of drought and floods in the key Black Sea growing area as it cut its 2010/11 forecast of global wheat output by 13 million tonnes to 651 million tonnes, but said it would still be the third highest crop on record.

“A prolonged period of dry weather and high temperatures significantly reduced yield prospects in Russia, Kazakhstan, parts of Ukraine and northwestern areas of the EU, while wet weather and flooding were detrimental for crops in Canada and parts of south-eastern Europe,” the IGC said on Thursday.

Anna Strashnaya, head of the Agricultural Forecasts Department at Russia’s Hydrometeorological Service (Rosgidromet) told Reuters further crop damage was likely to be limited.

“I don’t think any more damage may be done to grains,” she said. “Now we have to harvest what is left.”

This confirms Wednesday’s statement by CEO and President of SovEcon agricultural analysts Andrei Sizov Sr.

“Basically, the peak of losses have been passed. What has been burned has been burned,” Sizov told Reuters on Wednesday, commenting on the Black Sea region crop losses.

RAINS COMING

Rosgidromet forecast torrential rains on Thursday and Friday in the northwest and in the central part of European Russia as well as a 5-8 degree dip in temperatures from current levels close to +40 degrees Celsius (104 degrees Farenheit).

But in the regions along the Volga worst hit by the drought no rains are expected in the next 7 days and the heat of between +35 and +40 degrees Celsius will continue.

Heat records that beat previous 30-70 year-old highs were registered in July in the North-Western, Central and Volga Federal Districts, the service said.

“In fact, the absence of rains permits farmers to harvest what is left,” Strashnaya commented.

Russian officials are very careful giving crop forecasts but on Tuesday, the economy ministry admitted this year’s grain crop may be less than 80 million tonnes, 5 million tonnes below the latest official forecast.

Analysts believe that the crop may fall to less than 70 million tonnes nearly halving the country’s exports.

Strashnaya added the crop situation in the North Caucasus, considered one of Russia’s main breadbaskets, was benign and this may partially cushion the damage caused to other regions.

Heat is also set to stay in the Urals. In many regions of Siberia and the Far East, where the harvesting has not yet started, abundant rains are expected in the next few days.

UKRAINE CONTROLS EXPORTS

In neighboring Ukraine, suffering its own problems from drought and flooding, customs services set new controls on wheat exports which traders said on Thursday could halt shipments.

“This effectively means a ban on wheat exports,” Serhiy Stoyanov, head of Ukrainian traders’ and producers’ union UAC, told Reuters, as analysts said Ukraine was positioning itself to deal with grain shortages after its troubled growing season.

“The latest actions show that the government fears a food grain shortage in the country and the controls are directed at making food grain exports more complicated and limiting sales,” said Mykola Vernytsky from ProAgro consultancy.

Fellow Black Sea grain producer Romania, said on Thursday it had harvested 4.4 million tonnes of wheat from three quarters of the area planted but yields had dropped due to flooding and hail causing a 15 percent plunge in expected output.

Romania’s southern Black Sea neighbor Bulgaria said it had exported some 51,000 tonnes of wheat from its new crop, mainly to Spain, Italy and Portugal, while another 110,000 tonnes are being loaded, an official said.

Although Bulgaria’s harvest is expected to be down on last years because of the weather farmers and traders say its wheat exports may match last year’s exports of 1.4 million tonnes, if demand remains high and prices attractive.