FAO at the Baltic Grain Assembly

On July 6-7, the Baltic Grain Assembly “White Nights – 2023” was held in St. Petersburg, it was attended by the leaders of the grain sector, heads of companies operating the market of grain and processed products, logistics companies, as well as leading agricultural producers from various regions of Russia.

Igor Shpakov, Consultant of the FAO Moscow Office, spoke about the Agricultural Market Information System (AMIS) as well as about its structural application – the initiative on global agricultural monitoring. The system allows to assess in a convenient and visual form the weather and climatic conditions and adverse factors for 4 crop types that, according to FAO standards, form food security: wheat, corn, rice and soybeans.

If we talk about world grain production and the forecast for the 2023/2024 season, then according to preliminary estimates, grain production may increase by 1.0% to 2.813 billion tonnes. Most of the increase will be provided by a gain in the production of corn, as well as, in part, rice and sorghum. At the same time, the volume of wheat and barley production may decrease compared to 2022.

The consumption of cereals in 2022–2023, as expected, has decreased by 0.9% which is attributable to the decline of the consumption of coarse grains and rice as well as other types of cereals. At the same time, the upward trend in their consumption for food purposes remains extant.

In June, the FAO Food Price Index averaged 122.3 points, down 1.7 points (1.4%) from May and 37.4 points (23.4%) from March 2022 highs. The decrease in the Index was due to a drop in the value of the price indices for sugar, vegetable oils, cereals and dairy products, while the value of the meat price index remains almost unchanged.

Prices for agricultural commodities have decreased over the past 12 months, but food price inflation remains high and reaches double digits in many countries around the world. Moreover, costs of energy, transport and fertilizers for farms still make up a significant share of the retail price and remain high due to the main inflationary pressure.

Last season, export grain shipments amounted to 58.2 million tonnes, which is an absolute record for Russia, said Vladimir Petrichenko, CEO of the ProZerno analytical company (organizer of the Baltic Grain Assembly “White Nights – 2023”).

In the new season, the export potential will be strong thanks to a good harvest forecast and impressive carry-over stocks of grain at the end of the completed season, which are estimated at almost 27.5 million tonnes. The grain harvest this year will be just over 135 million tonnes. Wheat prices in the new season will be higher than in 2022/23, but their significant growth is not expected.

Oilseeds dynamics is multidirectional. Soybean prices are on the rise due to lower expectations for the Southern Hemisphere soybean crop. At the same time, prices for sunflower oil are falling due to the presence of high stocks of sunflower in the warehouses of Russian agricultural producers. On 1 July, they amounted to about 1.3 million tonnes (a year earlier, this figure was 0.99 million tonnes). At the same time, this year’s sunflower harvest is expected to be high –16 million tonnes, although not a record one. Four million tonnes of rapeseed, 5.5 million tonnes of soybeans, and 1.55 million tonnes of common flax are also expected to be harvested.  

Grain ranks fourth to fifth in Russian port traffic. At the end of 2022, 45 million tonnes of grain were exported through Russian ports. In general, 72 tonnes of grain can be shipped from Russian ports. At the same time, in the near future, Russia will be able to ship more than 80 million tonnes: the construction of a universal terminal in Ust-Luga on the Baltic is almost completed and it is scheduled to start operating in 2024.  

In the near future, production costs in the Russian economy will remain high due to currency volatility, increased import costs, rising logistics costs, continued staff shortages and rising labour costs. In the baseline scenario for the Russian economy, Daria Snitko, Vice President of Gazprombank, Head of the Analytical Department, said that at the end of the year it will be possible to compare GDP to the high level of 2021.

Russian cargoes are going through foreign ports less and less. If in 2007 almost 22% of goods from Russia were exported through them, now this figure has dropped to 2.3%. This means that the country is going to use its own ports, Vladimir Petrichenko summarised.

The rated capacity of the new grain terminal in the Baltic Sea is four million tonnes of grain per year, its storage capacity is 240 thousand tonnes, and its unloading station can receive up to 220 railcars per day. Investments in the project totalled about 5.5 billion roubles, Andrey Garnukhin, a member of the Board of Directors of Port Vysotsky LLC, told the gathered experts.

Year-round navigation is provided in the port, and its 12.7-metre-deep water area allows to receive sea vessels of increased capacity. 

140 thousand tonnes of grain products have been exported from the grain terminal of the port of Vysotsk (Leningrad region), which began operating in the spring of 2023, Anita Milekhina, Director of the St. Petersburg branch of the Federal State Budgetary Institution “Grain Quality Assessment Centre”, told the forum participants. From April to June, 140 000 tonnes of grain products were checked and confirmed by the Grain Quality Assessment Centre point operating at the port. Of these, 64 000 tonnes were sent to Tunisia, 27 000 tonnes to Turkey, 26 000 tonnes to Italy, and 22 000 tonnes to China. In total, six bulk carriers were sent from the terminal to foreign markets over the past period. 

On the second day of the Assembly, its participants visited the grain terminal in the port of Vysotsk, which began shipping grain at the end of April. According to experts, it will be more profitable for agricultural producers in a number of regions, including the Volga region, Siberia and partly the Centre, to export grain through the new terminal than through ports located in the South.