DJ USDA Reassesses Drought Damage To Russian Wheat Crop

Bill Tomson and Tom Polansek - DJ - 16 mins ago

WASHINGTON (Dow Jones)--New yield and harvest data will give U.S. Department of Agriculture analysts a better picture of how severely drought damaged Russia's wheat crop, in time for the U.S. government's next crop report.

Last month, the USDA lowered its forecast for this year's Russian wheat crop to 45 million tons, a 27% decline from 2009. However, USDA grain analyst Jerry Norton said "yield indications" and "harvest results we're getting in now" should present a clearer picture of how much damage the drought has really done.

The USDA will update its crop estimate in a highly anticipated crop report due next Friday.

Extreme heat and dryness began pounding wheat fields in Russia, Kazakhstan and Ukraine this spring and persisted through the summer.

Russia, which accounted for 14% of world wheat exports last year, last month said it was suspending grain exports for the rest of the year and Thursday extended the ban until late 2011.

Wheat prices brushed up against two-year highs when Russia said it was taking its grain off the world market. They have since pulled back but remain up about 60% from June lows.

Continued dryness has delayed planting of the crop that will be harvested in 2011 and raised worries that production will suffer for a second year. As a result of Russia's shortfall, importers have shifted demand to the U.S.

One large unknown piece needed for a complete evaluation of Russia's wheat harvest this year is Siberian production, Norton said. Farms in the far east of Russia "received pretty adequate rainfall all through the year and they've not suffered the very high temperatures that devastated" central and southern regions, he said. But Siberian farmers usually harvest later in the year and are subject to early snow damage.

-By Bill Tomson, Dow Jones Newswires; 202-646-0088; bill.tomson@dowjones.com

(END) Dow Jones Newswires

September 03, 2010 10:40 ET (14:40 GMT)

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