As much as 40% of the Russian grain crop could fail this year, recent reports from the Russian Agriculture Ministry suggest.
UK-based HGCA, says that production of grain from autumn sown crops is forecast at 28-30Mt against 48Mt in 2014. The estimate is based on the assumption that 3.6M ha of crops will fail which are currently in a “bad state”.
Brenda Mullan, Analyst, AHDB/HGCA said that spring weather will be important in determining just how much of the winter crop area will fail as well as being critical for the success of spring cropping.
"Markets will try and keep a close eye on Russian weather impacts especially if the rouble remains weak (which supports export competitiveness). This is likely to maintain the government’s close watch on domestic food price inflation.
"It would therefore be complacent to assume the removal of export controls when we reach harvest 2015."
HGCA also says that the weakness in the euro looks set to stay for the medium term and volatility will remain as the economies of individual member nations recover at different rates.
It says that in the UK, due to the large production of the UK’s key crops, strong grain exports are needed if a large carryover is to be avoided. UK wheat futures have dropped in price since January and this may have strengthened exports but data has yet to be released, it says.
The likelihood of the UK market being flooded with imports from the EU is not huge as the weakness of the euro against the dollar provides opportunities in global markets, HGCA experts say.