Russia Agribusiness Report Q4 2011

BMI View: Russia finally ended its grain export ban on July 1, potentially bringing to an end a period of short supply and high prices on the global market. Early developments in H211 suggest a promising picture in terms of strong exports, while this year's improved - though by no means spectacular - harvest has boosted confidence in supply levels over the 2011/12 marketing year. With heavy orders so far from Egypt defying many expectations, our prediction that Russia would retake its place as one of the world's largest wheat exporters appears to be proving correct. Domestic prices have fallen recently, suggesting exports can remain strong.
Key forecasts
?? In 2011/12, we are forecasting wheat production to rebound 25.5% to 52.1mn tonnes. Output is expected to fall short of levels in 2009/10 due to a lower planted area for the winter crop due to soil dryness.
?? Corn production in 2011/12 is forecasted to rise to 5.06mn tonnes, up 65% year-on-year as farmers cash in on high prices.
?? We continue to forecast poultry production growth in 2010/11, albeit at a slower rate than in 2009/10, as higher feed costs and production capacity constraints limit production growth. We are now forecasting production in 2010/11 to reach 2.5mn tonnes, a year-on-year increase of 8%.
?? The outlook for beef is less rosy due to poor producer returns and the current high feed costs. In 2010/11, we are forecasting beef production to fall slightly to 1.4mn tonnes owing to high feed costs and a slight fall in cattle inventories.
?? In 2010/11, we forecast milk production to remain virtually flat at 32.0mn tonnes. Higher yields and rising milk prices will stimulate production over the short to medium term, but the herd will be drawn down due to the summer heatwave.
?? Real GDP to grow 4.6% in 2011 and 4.5% in 2012.
Industry developments
Russia finally removed its export ban on July 1. Early developments in H211 suggest a promising picture. This year's improved harvest is already boosting confidence in production levels, leading to falling prices. Meanwhile, our expectations that Russia would retake its place as one of the world's largest wheat exporters appear to be proving correct. In July, Russia cleared up at Egyptian wheat tenders, winning its third tender in a row since the abandonment of the ban. The three orders meant Egypt bought 480,000 tonnes of Russian wheat in July.
Russia's historically rocky trade relations with Belarus flared this year when the devaluation of Belarus' currency lowered the price of its exports to the point where Russian producers complained they were unable to compete. In response to producers' concerns, the Russian government renegotiated the terms of bilateral trade with Belarus. The two countries' respective agricultural ministries agreed to monitor prices of Belarusian dairy exports on a weekly basis to ensure they remained within agreed limits. If prices deviated from the limits, exports to Russia could be suspended.

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Executive Summary 5
SWOT Analysis 7
Russia Agricultural SWOT 7
Russia Political SWOT . 8
Russia Economic SWOT 9
Russia Business Environment SWOT . 10
Industry Forecast Scenario . 11
Russia Dairy Outlook . 11
Russia Milk Production, Consumption & Trade . 12
Russia Butter Production, Consumption & Trade . 12
Russia Cheese Production, Consumption & Trade . 12
Russia Milk Production, Consumption & Trade . 15
Russia Butter Production, Consumption & Trade . 16
Russia Cheese Production, Consumption & Trade . 16
Russia Rice Outlook . 18
Russia Rice Production, Consumption & Trade . 18
Russia Rice Production, Consumption & Trade . 19
Russia Grain Outlook 21
Russia Wheat Production, Consumption & Trade 22
Russia Corn Production, Consumption & Trade 22
Russia Barley Production, Consumption & Trade 22
Russia Wheat Production, Consumption & Trade 25
Russia Corn Production, Consumption & Trade 25
Russia Barley Production, Consumption & Trade 25
Russia Livestock Outlook . 27
Russia Poultry Production, Consumption & Trade . 28
Russia Pork Production, Consumption & Trade . 28
Russia Beef & Veal Production, Consumption & Trade . 29
Russia Poultry Production, Consumption & Trade . 31
Russia Pork Production, Consumption & Trade . 32
Russia Beef & Veal Production, Consumption & Trade . 32
Commodity Price Analysis 34
Monthly Softs Update . 34
Cocoa 34
Table: Cocoa 34
Coffee 35
Table: Coffee 35
Milk . 36
Table: Milk . 36
Sugar 37
Table: Sugar . 37
Monthly Grains Update . 38
Corn 38
Table: Corn 38
Rice . 39
Table: Rice 39
Soybean 40
Table: Soybean . 40
Wheat 41
Table: Wheat. 41
Downstream Supply Chain Analysis 42
Industry Forecast Scenario- Food . 42
Consumer Outlook 42
Food. 43
Total Food Consumption 43
Table: Food Consumption Indicators -- Historical Data & Forecasts 44
Mass Grocery Retail 45
Table: Russia's Top 10 Mass Grocery Retailers . 46
Table: Mgr Value Sales By Format -- Historical Data & Forecasts 46
Trade . 47
Table: Food, Drink & Tobacco Trade Indicators (US$Mn) -- Historical Data & Forecasts . 47
Macroeconomic Forecast 48
Table: Russia - Economic Activity, 2008-2015 . 50
Global Food & Drink View . 51
Food & Drink Roundup Q211: Core Views . 51
BMI Forecast Modelling 59
How We Generate Our Industry Forecasts 59
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