Making forecasts for the 2024 harvest now is like dividing the skin of an unkilled bear. Despite the positive start of the sowing campaign, associated with good moisture replenishment of the soil, a lot of risks remain. This includes a possible delay in sowing due to bad weather, the expected summer drought, and the unpredictability of autumn conditions during the harvest period. The situation can change instantly, as recently happened in Russia, where sudden return frosts in May led to the death of large areas of winter crops.
Evgeniy Karabanov, expert-official representative of the Grain Union of Kazakhstan, founder of the Northern Grain group of companies, told the ElDala.kz portal about this.
The starting conditions in the grain belt are not bad in terms of productive moisture in the soil, the expert said. - Another plus is that now, during the sowing season, there are no extremely high temperatures, which we have seen in the last few seasons. Rains in May should also support the seedlings well. Therefore, speaking about today’s view of the situation, if no severe natural disasters occur during the summer, then we should harvest an average wheat harvest.
In recent years, the average harvest for Kazakhstan is 13.5 million tons. Evgeniy Karabanov believes that such a result would be optimal, taking into account the fact that carryover balances will be at the level of 2.5 million tons. This volume of grain in the bins will make it possible to both supply the domestic market and satisfy the needs of buyers abroad.
As for the impact of the harvest on prices, an average volume would suit the market. Now the price for 3rd class wheat is 110 thousand tenge/ton (including VAT) from the elevator. This level has not changed for 3-4 months. As for prices for the new crop, frosts in Russia (where 10% of winter crop areas were affected) will strengthen world prices. A certain increase has already occurred, and prices will finally balance out when the volume of production this year in both the Russian Federation and the Republic of Kazakhstan becomes clear.
“Our price is formed through the prism of wheat prices in Russia,” explained Evgeny Karabanov. - Taking into account the latest events in our neighbors, the figure of $200 per ton of new crop wheat in Kazakhstan is starting to look real. But the final picture will become clear only in the fall.
The sales markets for Kazakh grain will remain traditional - the countries of Central Asia (Uzbekistan primarily), as well as China. Moreover, China greatly helped Kazakhstan to get rid of sprouted wheat from the previous harvest. Despite the fears of Kazakh traders and farmers that 3.5 million tons of non-grade wheat will have to be sold for two to three years, it has found good demand due to its low price. Now the remains of unclassified grain in the country are at the level of 1 million tons, and the price for such grain has risen to 65 thousand tenge/ton against 45 thousand tenge/ton at the end of 2023.
“Iran has already stated that it will not buy wheat this year, so to diversify sales we only have China,” added Evgeny Karabanov. - We need to establish logistics in this direction so that agricultural goods go there rhythmically, predictably, in accordance with plans. China annually imports 10 million tons of wheat and barley. Considering our geographical proximity, we are obliged to occupy at least 10-15% of the grain market of the People's Republic of China. Of course, this requires well-functioning logistics and a price that suits both the seller and the buyer.
According to KTZ data, in 2023 Kazakhstan shipped 592 thousand tons of wheat to China. Experts estimate the potential of this area is 10 times higher, up to 5 million tons per year.
By the way, in March of this year, China issued permits to three dozen Kazakh elevators to supply three more types of crops - rapeseed, lentils and peas. There are good prospects here too.
It should be noted that the Grain Union of Kazakhstan will hold the First Kazakh-Chinese Grain Forum on June 5-6. It is supported by FAMSUN (PRC) and the Boro-Tala Chamber of Commerce.
The city of Boro-Tala (Bole) is the administrative center of the Xinjiang Autonomous Region, within whose borders the Alashankou railway station is located, one of two railway junctions between the PRC and the ROK.
Kazakh and Chinese businessmen will participate in the forum. The purpose of the meeting is to develop an effective mechanism for interaction between the parties for the free supply of Kazakh agricultural products on the Chinese market. Here, a lot will depend on whether the government agencies involved in regulating the export/import of grain and its processed products (customs service, quarantine service, railway administration on the Kazakh and Chinese sides), who will also become participants in the forum, find a common language.