According to USDA’s World Agricultural Supply and Demand Estimates for September, global wheat supplies for the 2018/19 seasons are raised 4.7 million tons on a 3.4-million-ton production increase and higher beginning stocks. Harvest estimates were raised for Russia (3.0 million tons), on harvest results to date in the winter wheat region and continued excellent weather in the spring wheat belt; and Kazakhstan (0.5 million tons, to 15 million tons), on excellent spring wheat conditions.
Two months previously, USDA Foreign Agricultural Service/Astana forecasted Kazakhstani wheat production in the 2018/2019 agriculture year (July-June) at 14 mmt (million metric tons), 0.8 mmt lower than in 2017/2018 agriculture year, as wheat area sown falls. In August, Kazakhstani wheat production estimates for the 2018/19 seasons were raised by USDA from 14 mmt to 14.5 mmt.
Kazakhstan has traditionally been regarded as one of the top 10 grain exporters in the world, selling its produce to over 70 countries. The International Grains Council (IGC) forecasted wheat production in Kazakhstan for the 2017/18 seasons as 13 million tons. In reality, the effective result far exceeded the IGC’s expectations. In 2017, Kazakhstan harvested one of its heaviest grain crops since 2011 that enhanced the country’s export potential appreciably. The country then produced 14.802 million tons of wheat, slightly below the high level of previous year, but much higher than the amount forecast earlier.
The year-over-year decline in production have been mainly due to the reduction in area planted following the enactment of the Kazakh government’s program for 2017-2021 which intends to reduce the wheat area planted from 12.4 to 10.1 million hectares in favor of more profitable oil crops. According to the program, the government has stopped issuing subsidized credits for wheat production.
Previously, Kazakhstani aggregate cereal exports were awaited to be at about 8.3 million tons in the 2017/18 marketing year, down 3 percent from the 2016/17 seasons due to expectations of smaller demand for wheat outside of the CIS Asia sub-region and increasing competition with grains from the Russian Federation, which gathered a record crop in 2017. The effective result has again turned out to be substantively higher than expected.
According to the IGC report, Kazakhstan’s aggregate cereal exports amounted to 9.5 million tons (against 8.2 million tons in the MY 2016/2017), including 8.3 million tons of wheat (against 7.4 million tons in the MY 2016/2017), in the 2017/18 marketing year. The main consumers of the Kazakh produce are Central Asian countries (65 percent), Turkey (9 percent), and China (8 percent). Due to competitive prices and the new delivery channels, Kazakhstan’s total wheat exports to Azerbaijan and Turkey have undergone impressive growth in the current marketing year.
Not long ago, Iran was one of the main destinations for the Kazakh wheat (900 thousand tons). But the situation has changed dramatically in just a few years. Iran has closed its market to wheat imports by introducing a ban on the import. It has achieved self-sufficiency in wheat in the last few years.
Last spring, it has been reported that the second largest country in the Middle East has agreed to buy the grain from the Russian Federation and the Republic of Kazakhstan, and total shipments may reach as much as 1 million tons a year over the next five years. But, for the time being, this remains unfulfilled due to, inter alia, unresolved funding issues.
The wheat stocks held by eight major exporters – Argentina, Australia, Canada, European Union, Russia, Kazakhstan, Ukraine and the United States – have increased during the month of August to 55.22 mmt, or 21%, of the estimated total global stocks. Yet this is well below levels seen in the past two crop years.
Stratégie Grains anticipates 2018-19 Kazakhstan wheat production will fall to 13.7 million metric tons. Wheat planted area is expected to decrease slightly in 2018-19 to 11.7 million hectares (28.9 million acres) due to lower prices. Nearly all of Kazakhstan production is spring wheat.