The US Department of Agriculture (USDA)’s attaché in Kazakhstan expects that the country’s wheat production will fall 20% to 13 million tonnes in the 2023-24 marketing year while beginning stockpiles are expected to rise due to export restrictions and cheap Russian imports that undercut domestic suppliers.
Kazakh wheat exports, total supply and yields are all projected to decline in 2023-24, the USDA’s Astana office said in the report that provided the first estimates for the upcoming marketing year.
The country’s wheat farmers are projected to produce 14.6 million tonnes in 2022-23, the biggest crop in five years, unchanged from the estimates in the USDA’s World Agricultural Supply and Demand Estimates (Wasde) report on April 11.
While higher surface and subsurface moisture levels in April 2023 compared to this time last year can signal better planting conditions, reports of higher-than-normal temperature and reports of ‘sharp evaporation’ in some northern districts have led the Astana office to project “slightly smaller spring crop yields” in 2023/2024 compared to the prior marketing year.
Dry weather and favorable temperatures have resulted in high-quality grain coming from the three northern wheat-growing regions, according to the report.
The Central Asian country is expected to export 9 million tonnes in 2023-24, down 14.3% from 10.5 million in 2022-23.
The USDA’s Astana office noted that Kazakh exporters face several challenges, such as “limited rail capacity, outdated infrastructure, under-recorded grain imports from Russia, and delayed Value Added Tax (VAT) reimbursements.”
China recently agreed to accept Kazakh wheat transported in grain hopper cars after previously only accepting grain shipped in containers, which may increase the share of wheat exports going to China, according to the report.
“On average, Russian wheat imported to Kazakhstan is $10-15 tonnes cheaper than local wheat. Kazakh mills imported Russian wheat of the 4th class and blended it with local high-quality wheat to produce compatible quality wheat flour at a lower cost,” the report said.
Kazakh poultry farmers have also switched to Russian feed-quality wheat because of the lower cost, which has helped spark a “precipitous drop” in prices.
Barley production is expected to decline 9% to 3 million tonnes in the upcoming marketing year.
The local attaché projects 2022-23 barley output to come in at 3.3 million tonnes, which is in line with the most recent World Agricultural Supply and Demand Estimates (Wasde) report and up from 2.4 million the prior marketing year.
The Astana office bases its 2023-23 crop estimates on “official government reporting, data showing improved precipitation and weather conditions, and a consensus among barley producers who received higher yields.”
Kazakh barley exporters are concerned that Russian sellers will be able to take market share in Iran due to the combination of lower prices and export duties.
“Traders are optimistic about increasing barley exports to China,” the report said.
Iran, Uzbekistan, and China are the biggest export markets for Kazakh barley, while Uzbekistan, Afghanistan, and Tajikistan are the biggest buyers of the country’s wheat.
For more information on the current wheat market, take a look at our dedicated page for wheat price forecasts.