It's a Breadmaker's Dream as Russia Faces Glut of Premium Wheat
By Editor - Wed Jul 10, 11:26 pm
(Bloomberg) — It’s a case of too much of a good thing for Russian farmers –they’re reaping unusually high-quality wheat as the new season starts but the abundance of top-notch grain means traders are reluctant to pay big premiums.Recent hot and dry weather in Russia’s southern wheat belt, where harvesting started a few weeks ago, has boosted the level of protein in the kernels. Higher protein content is linked with gluten, the component that makes bread dough strong and stretchy. At Andrey Burdin’s farm in the southern region of Krasnodar, the share of higher-quality wheat – with at least 13% protein – is about 80% of the total crop this year. That’s four times as much as usual.“Quality improvement requires certain effort,” Burdin said by phone. “This year, even those who didn’t make any effort got high quality. Pure luck.”QuicktakeHow Russia Came to Dominate WheatSome farmers are seeking higher prices for the better wheat but the large supply of such grain makes it difficult, he said. “We have a wall of wheat coming” that has protein upward of 12.5% in southern Russia, according to Dmitry Rylko, director general at consultant the Institute for Agricultural Market Studies, or IKAR.“We have a wall of wheat coming”Temperatures were so high in May and June that some analysts started to reduce estimates for the Russian crop. Harvesting is now starting in central Russia and will continue through September as crops ripen in Siberia. As the harvest progresses, the overall quality of the Black Sea nation’s crop may get closer to usual, according to Moscow-based IKAR.Some southern Russian farmers are holding on to grain, betting the premium for their high-grade wheat will get fatter if crops in other parts of Russia are of lower quality, Burdin said.“I have some wheat with 16% of protein. It used to be a first-class achievement before,” he said. “But the offered price is the same as for 12.5%.
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