By Kiryl Sukhotsky and Aleksandras Budrys
August 10, 2010 8:05 AM EDT
Drought-devastated Russia could extend a grain export ban into next year and may cut its 2010 beet sugar output, reflecting the dimming prospects for crops in the scorched Black Sea bread basket region.
Russia, the world's No. 3 wheat producer in 2009/10, said last week it would halt grain exports until the end of 2010 as the country's worst heatwave on record destroyed vast tracts of wheat and barley crops.
Firefighters battled wildfires covering 1,740 square km (672 sq miles) in what the state weather forecaster said was Russia's worst heat wave for a millennium.
The intense heat and smoke have nearly doubled death rates in Moscow, a city official said on Monday, as a shroud of smog from the raging forest and peat fires beset Russia's capital for a third week.
Analysts SovEcon estimated on Monday that Russia's wheat crop could fall by nearly a third to 43.5 million tonnes and the export ban was likely to be extended into 2011.
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The crop estimate was well below the consensus in a Reuters snap poll on August 5 of 46.5 million tonnes.
SovEcon forecast Russia's wheat exports in 2010/11 may be around 3 million tonnes, plunging from the 18 million tonnes the International Grains Council estimate were shipped in 2009/10 when it was the world's number three exporter.
"The ban (on grain exports) will most likely be extended into the new year," SovEcon said, adding an expected decline in barley production would increase the demand for wheat to produce animal feed in the regions hit by drought.
Wheat prices fell on Monday, but remained at their highest level in nearly two years, having surged 70 percent from June's lows, on concerns over the effect of the drought on Russia's crop.
In neighbouring Ukraine, the world's sixth-largest wheat exporter in the 2009/10 season, analysts and officials cut crop and export forecasts.
"Wheat yields are lower than we expected before because of the very hot weather," Elizaveta Malysh from UkrAgroConsult told Reuters.
A senior Ukrainian Farm Ministry official said this year's wheat harvest could fall to about 17 million tonnes, below the consensus in a Reuters poll last week of 18.1 million and down from 20.9 million in 2009.
CONTRACTS CANCELLED
Russia's ban has forced some exporters to cancel major contracts of Black Sea wheat to Bangladesh, signalling the need for millers to scramble for supplies from other key growers like Australia.
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