Russia looks set to boost exports and supply more countries with wheat fed to livestock after a record crop and weather damage left a bigger amount of grain unfit for human consumption.
The nation shipped out about 272,000 metric tons of feed wheat in 2015-16 and the amount may be several times that this season, with some grain going to new markets such as South Korea, according to grain inspection firm SGS SA.
Russia is expanding wheat sales and supplanted the U.S. as the top exporter last season after the weak ruble and good growing conditions led to more supplies. In recent months, the quality of grain suffered in some areas as rains and hot spells lowered protein content and caused fungal disease, meaning there’s more wheat that’s only suitable for livestock.
Even with more exports, Russia is still expected to be a small part of the feed-wheat market, and in the past has typically consumed all of its feed grain. Ukraine is a major supplier of the wheat variety and globally, countries will export about 20 million tons this year, according to the International Grains Council.
“Russia has been considered as a provider of exclusively milling grain,” Irina Sarycheva, a manager at the Russian unit of Geneva-based SGS, said in an interview in Moscow. “It wasn’t big in feed wheat. Now, Russia is diversifying its offer.”
Russia is expected to boost total wheat shipments by 18 percent to 30 million this season, U.S. Department of Agriculture data show. That may help compensate for a plunge in supplies from France, the European Union’s top grower, where flooding earlier this year devastated crops.
There were deluges in much of central and southern Russia in May and early June, while rains soaked fields in central areas in July and August amid high temperatures. To the west of the Urals region, feed wheat will account for 31 percent of the crop this year, up from 26 percent a year earlier, SGS estimates.
The increased supply has prompted some traders to ask SGS to test cargoes to see if they’re fit for export to South Korea, Sarycheva said. Russia may also expand sales of the grain type to Bangladesh and other destinations, she said.
“We have seen an unusual exportable surplus of feed wheat from Russia,’’ said Evgeniya Dudinova, a trader at Al Ghurair Resources, a Dubai-based commodities company. Some sellers are prepared to offer at a discount of at least a couple of dollars a ton to wheat from Ukraine, she said.
Because of abundant supply, it may be cheaper for Russian livestock farmers to replace some of the corn fed to animals with feed wheat, Sarycheva said. If that were to happen, then more Russian corn could be exported, she said.
Some of the lower-grade wheat can still be exported as the milling variety by blending it with high-quality grain so that shipments meet a 12.5 percent protein content, the benchmark level Russia uses for human consumption, Sarycheva said.
Russia is expected to produce about the same amount of milling wheat as last year and exports will be steady, Sarycheva said. However, because of the quality issues and bigger harvest, milling wheat will account for a smaller share of the total crop, she said.