There's Good Reason for Russia to Worry About Expected Bad Weather

Russia’s wheat crop is looking even bleaker by the day.

In the past week, at least four analysts ratcheted down their estimates for Russia’s wheat crop because of bad weather. Dryness in the south, the main growing region, has parched crops, while cold and soggy conditions are hurting fields in Siberia and the Urals. The U.S. Department of Agriculture expects the crop to shrink for the first time in six years.

“The prospects for the new crop are melting down,” Arkady Zlochevsky, president of the Russian Grain Union lobby group, said at a conference in the country’s southern city of Gelendzhik on Friday. 

The lower forecasts are helping fuel a rally in prices, and money managers are the most bullish in 10 months. The bleakest estimate is from the Russian Grain Union, which sees the crop shrinking as much as 21 percent from last year. The harvest size -- still expected to be the nation’s third-largest on record -- will be among the market’s focus when the USDA releases world estimates Tuesday.

A lack of rain in the south in May and June will probably cut wheat yields by 30 percent from a year earlier, according to the trading unit of southern grower Steppe Agroholding. Any showers before winter wheat starts being harvested toward the end of the month probably won’t help crops, said Alexey Novoselskiy, general director at the trading unit based in Rostov-on-Don.