The Grain Union of Kazakhstan estimates the initial stocks of wheat as of January 1, 2022 at 8.3 million tons. Taking into account imports from the Russian Federation in the amount of up to 1.4 million tons (during the remaining period until September 1, 2022), the total supply of wheat will be 9.7 million tons, with domestic demand of 3.9 million tons by the end of the current season. Of these, 0.46 million tons of wheat will be required for the production of fresh bread. The remaining 3.5 million tons will be used for feed purposes, the production of flour, pasta, etc. Taking into account the volumes used for domestic consumption, the export potential by the end of the current season will be 4.25 million tons of wheat and flour in grain equivalent, from of which wheat - 3 million tons, flour - 0.9 million tons in physical weight. As a result, the total demand by the end of the current season will be 8.2 million tons. The ending stocks of wheat rolling over to the new season will amount to about 1.5 million tons, and this figure will be the highest for the last 4 seasons.
Domestic prices for wheat are in the range of 115-118 thousand tenge per ton and are now being adjusted under the influence of the following factors:
1.stable import of grain from the regions of the Russian Federation bordering with Kazakhstan. Thus, the import of Russian wheat with payment of VAT on import costs 116 thousand tenge per ton with delivery to the KhPP (at current prices in the Russian Federation 16.5 - 17 thousand rubles per ton). For the period from July 1 to December 30, 2021, according to the Rosselkhoznadzor, more than 1.6 million tons of grain were exported to the Republic of Kazakhstan, of which wheat - 1.3 million tons;
2.Kazakh processing enterprises are actively using the opportunities of importing Russian grain and reducing activity in the domestic market due to unsatisfactory current supply prices;
3.Kazakhstani grain importing countries have shifted their focus to Russian grain and flour and are also aiming to reduce export prices for Kazakhstani products. This forces domestic grain traders to refrain from active purchases at prices offered by farmers. Export of wheat and flour in grain equivalent for September-December 2021 was 13% lower than the same period last year;
4.the expected increase in offers for the sale of grain in February-March of this year, associated with the need to finance the upcoming sowing campaign, will put pressure on domestic prices in the absence of factors of increased demand for grain from importing countries;
5.forthcoming introduction from February of this year. export quotas in the Russian Federation and the possibility of exporting grain to the Republic of Kazakhstan against the backdrop of stable demand from Kazakh importers. It is expected to import wheat in the amount of up to 1.4 million tons from the Russian Federation before the end of the current season;
6.a decrease in agricultural exports (including due to China, Iran and Afghanistan) formed carry-over balances at the beginning of 2022 above last year's level;
7.the impact of world and regional grain prices, formed under the influence of changes in weather conditions during the growing season of winter crops in other countries of the world, as well as a possible aggravation of the geopolitical situation.
Thus, the volume of wheat imports from the Russian Federation significantly compensates for the shortage of crops in the Republic of Kazakhstan and ensures domestic consumption and export potential. And, in the event of favorable weather conditions and the absence of the influence of the consequences of geopolitics, domestic prices for wheat in the Republic of Kazakhstan may be adjusted to the level of 113-115 thousand tenge per ton.