1975 SOVIET GRAIN CROP AND TRADE PROSPECTS (S-09058)

Created: 6/16/1975

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^'Department of State fori use in briefing Uae^for Senator Hubert H. Humphrey, SenateRelations. Committee

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ased on weather data through Hay and

collateral information through mid-Jj^^'June, this publication re'eaps^ and crop developments during the UmC spring, updates our earlier estimate iiac7 of the USSR's grain crop and discusses lines the likelihood of Soviet grain imports

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USSR: Prospects for Grain Production and Trade at Mid-June

The note on the first page of this reportas

NOTE: This report was prepared by the Office of EconomicIt incorporates' materials and analysistheof

Geographic and Cartographic Research. Comments andthis publication are welcomed and may bethe Office of

Economic Rese'arch,

Table of Contents

!^

Discussion 2

Status of the Grain

Winter Grains

, Spring

V Outlook

*

Imports

Figures

Figure 1, USSR: Grain Prospects at the End

. of5

Figure 2, USSR: Major Weather Patterns

During5

Figure 3, USSR: Grain Purchases by Month,

13

Tables

Table 1 USSR: /Spring Grain Sowing

copfflfik.

Summary

Drought in parts of the USSR's spring grain area has reduced the estimate of this year's cropillionmetricillion tons less than our earlier forecast.

Conditions in most of_the Europeanthe major winter grain areaare good to 'excellent, and weecord winter grain crop of aboutillion tons. The outlook for spring grains remains mixed. Because of high moisture levels, record spring grain yields are likely in parts of the eastern New Lands area and in western Siberia. In the Volga valley, southern Urals, and western Kazakhstan, however, soil moisture is seriously low. Estimated yields in these areas have declined to three-fourths of the long-term average. Our forecastpring grain cropillion tons assumes that the drought will break soon. If not, spring grain yields and our estimate of the Soviet crop will bo reduced accordingly.

The Soviets may purchaseillion tons of grain in the next several months for delivery in Fiscal Yearven though the current estimate of the harvest exceeds total requirements byillion tons. Imports may be eeded to cover shortfalls in corn for the livestock program and in high-quality milling wheat.

Discussion

Introduction

By early June, spring grain sowing operations were

drawinglose, and the winter grain harvest was just

beginning. Weather during late April and May favored

' crop development in the western and eastern portions of

the Soviet Union but redu'ced yields in the central portion.

This publication uses weather data through the end of May

and, collateral data available in mid-June to describe

weather and crop developments during the spring, to update

earlier estimates of the sizo of5 Soviet grain crop,

and to discuss the likelihood of Soviet grain imports.

Status of the Grain crop

* In most of the European USSR (the major winter grain

area) and the eastern part of .the New Lands (where spring

grains predominate) conditions are fair to excellent for

the grain crop (See In the Volga valley, which

grows both winter and spring grains, and in the spring grain

areas of the southern Urals, western Kazakhstan, and Kustanay,

a prolonged drought has seriously lowered soil mositure. Yields i

in those areas have already boon reduced and will shrink further unless the dry spell is broken.

Winter Grains

Throughout the past winter and spring, conditions in most of the winter grain areas have been favorable, plants

wintered well, and on early spring promoted growth. Cumulative precipitation from September through May was

about normal. During April and early May, the eastern Ukraine, non-black soil zone,and parts of the central region

began to dry out.. In late May, however, rains fellmost of the area, replenishing soil moisture and providing the basis for record or near-record yields. ate-May trip through the Ukraine by tho US agricultural attache stationed in rtoscow confirmed that

The Volga valleyroblem area. Precipitation during April and May was much less than normal, and soil moisture reserves are low. This area normally accounts forillion tons of winter grain, or aboutf the winter crop; yields in this area are down, probably one quarter to one-third below average.

On balance, however, conditions are excellent, and weecord winter grain crop. The harvestwhich will eventually coverillion hectareshas just begun in the south. Barring unexpected harvestinginter crop of aboutillion tons shouldillion tons greater than the record posted

Spring Grains Weather in the spring grain area has created two paistinctly different situations. In parts of the eastern <Kew Lands area and western Siberia, where moisture levels sure better than normal, record yields are' likely. InVolga valley, southern.Urals, western Kazakhstan, andebowever,oisture is, critically low. Cumulative re capitation from September through May illustrates the ^Disparity in -moisture conditions between the two areas:*

s 4

Precipitation, September Through May

Millimeters

Spring

Area

middle and lower Volga valley, southern iSUrals, Western Kazakhstan and Kustanay. This area accounts ivlfor aroughly one-fourth of the area sown in spring grains andne-fourth of spring grain" production.

-drought-stricken areas were dominated during much

SkfaE'TJpril and Maytationary high pressure system

tween' the Caspian and Aral Seas. The clockwise

'rjaovement ol air around this system brought hot, dry winds

from'the-deserts of Centra! Asia into the Volga valley,

-western Kazakhstan and. at times, the eastern Ukraine. This

high pressure center effectively" blocked the movement of

Precipitation in each spring grain area is weighted by its share-of the total area sown in spring wheat.

precipitation-bearing low pressure systems into.these areas (see

Sowing began earlier than usual this year. The mild, winter led to less-than-normal winterkill and resowing, while the early spring helped field work. Although well

- ahead of normal by the end oil April, the sowing pace slackened in early May In the Baltics and the eastern part-of the .New Lands, rain hampered sowing; in the rest of the New Lands, planting was delayed by dry ness. .Nevertheless,9 million hectares of

_ spring grain were sown, and'the plan for spring wheatorn plantings was overfulfilled.:'

At this earlyood" spring grain harvest seems

likely. illion hectare's of springillion hectarescorn, will be harvested this year. Despite the dry conditions in parts of the spring grain area,-weield5 centners per-hectareabove average but slightly below the trend in yields since thes:

Grain Yields

(centners per hectare)

Annual Average

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Table 1

Spring Grain 'Sowing Progress

Million hectare*

Area Year pril pril ay ay

Harvested Area ?/

10 32 . 54 j 86

7_

13 39 V 58 90

13 6 . 54

4

^ 21 59 87

(Sstimatec

corn; state and collective farms only.

corn; state and collective farms"as well

holdings and other state enterprises.

* *

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private

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Spring Grain Yields (continued) (centners per hectare)

Increased yields in recent .years;been due in partplantings of spring barley, agrain. pring barleyfgrain area and accountedf spring arley accountedfgrain areaf production. The shiftbarley is believed to have continued in

ecordillion tons of winter grain and an above average spring grain harvestillion tons, total production would amountillionillion tons less than our April forecast. The expected harvest falls between3 record productionillion tons and last year's second-best cropillion tons and would approxiwate the Soviet production planillion tons.

This estimate is necessarily preliminary.* Dryness in

the basis of the descriptive ability of the weather/ yield relationships employed (using weather throughhere is ono chance in six that grain production will beillion tons and one chance in six that the harvest will beillion tons.

parts of the spring grain areas during May hasthe cropillion tons. There wasin these areas during the firstaysduetationary high pressure system in thevalley. Within the , spring

grains will berucial periodcrop development. Unless rain falls in the drought-stricken areas by then, yields will be cut further. In addition, the size of the winter crop is not yet certain since the harvest hasegun. This year's lush growth couid cause more lodging than usual, complicating the harvest.

illion tons, the grain crop would exceed estimated Soviet requirements ofillion tons. Moreover, stocks at the ond4 were at near record levels, and another bumper harvest would strain already limited storage facilities. Therefore, Moscow would not need to buy large amounts of grain in the world market.

So far this year the Soviets have not bought any grain, although deliveries continued under old contracts. The only Soviet grain transactions5 have adjusted contracts made In January and February the USSR cancelled some US and foreign contracts and switched some contracts from one grain to other grains to take advantage of price

chaiigcii. in addition, the saleons of US corn was cancelled in May because the quality failed to meet Soviet standards. In the first half nillion tons of grain will befrom these old contracts. This will bring total imports for5 toillion tonsabout that needed to cover requirement shortfalls from4 harvest.

Forecasts of Soviet grain imports are highly uncertain bocfause the link, between the harvest and the imports is tenuous. ariety of other factorsthe desire to stockpile, requirements for particular types of grain, demands for grain from client states, the availability of other kinds of livestock feed, and world grain pricesenter into the determination of Soviot grain purchases. In years following cleiir harvest failuresecord amounts of grain were imported. In other years, imports were not correlated closely with domestic production.

Inhe USSR, however, is likely to buyillion tons of cornillion tons of wheat to cover shortfalls in certain types of graineven If the harvest turns out toillion tons. The

livestock program, for example, requires large quantities of high-energy feed grains, such as corn, that cannot be grown domestically in sufficient quantity. Also, if the drought reduces spring wheat yields, the Soviets may import some high.quality durum wheat. lurry of pur-chase rumors surrounded the May visit to the OS of an Eksportkhleb (Soviet grain trading agency) official, but he returned to Moscow after only cursory discussions with the major grain companies.

Based on past behavior, most buying would bo carried out this summer and in early fall. , the largest purchases were made in July and August, with smaller amounts bought inovember (see Grain prices probablybe relatively attractive in the comingesultumper US crop and generally good crop conditions throughout the world. In the US, July wheat futures fellushel in the first week of June comparedigh of more thanushel set in4 andbushel the previous June.

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