Weather set to hit harvest in Russia's largest grain region
MOSCOW, May 20 (Reuters) - High temperatures and a lack of rain over the coming months are expected to deplete the harvest in Russia's largest grain region Rostov, the head of the local grain lobby group said after a farming emergency was declared.
Rostov Governor Yuri Slyusar issued a decree on May 19 introducing the state of emergency for farming after spring frosts and ordered local authorities to evaluate the damage.
The declaration allows farmers to seek compensation. Insurance payments to farmers linked to bad weather grew by 76% in 2024.
Apart from the frosts, a lack of rain is expected to deplete the harvest further, Anatoly Kolchik, head of the local branch of the Russian Grain Union lobby group, told a local edition of the Vedomosti daily on Tuesday.
"The problems affected not only winter crops but also spring crops. They simply won't have enough time to gain the necessary strength," Kolchik was quoted as saying, adding that only the upper layers of soil had sufficient moisture.
Andrei Sizov from Sovecon consultancy also cited the lack of rain as the biggest threat to crops in Rostov and that yields were set to decline.
"Overall, the situation has improved with the recent rainfall, but it's far from sufficient. The potential yield is below average," Sizov said.
Rostov became the third Russian grain-producing region to declare a farming emergency after frosts in late April and May. The others were Voronezh and Belgorod.
The region's grain harvest fell by 22% last year after Rostov was hit by spring frosts and then by drought, with the wheat harvest declining by 38%.
The grain harvest for the whole of Russia, the world's biggest wheat exporter, declined by almost 14% in 2024.
In February local authorities forecast this year's harvest in Rostov would be 13.7 million metric tons, 20% more than in 2024.
"The situation this year remains tense, both in terms of weather and economic parameters," Rostov's First Deputy Agriculture Minister Olga Gorbaneva said during the public hearing of the region's budget.
Gorbaneva said the region's agricultural sector profit margin fell to 8% in 2024 from 16% the previous year. She also said that grain farming costs rose by 35% last year while revenue rose by 13%.
Russia's Agriculture Minister Oksana Lut said last week that crop damage from May frosts is not significant this year and is estimated at only about 10% of last year's damage. She also said that a lack of moisture in the soil was the next big risk.
($1 = 80.8500 roubles)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
2 hours ago
- Reuters
TRADING DAY Good vibrations turn sour
ORLANDO, Florida, June 11 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. The US and China have reached a trade deal, or at least agreed on the framework of a deal, which together with surprisingly soft U.S. inflation data, gave markets a lift on Wednesday. But Wall Street's gains were mild, and they were later wiped out by rising tensions in the Middle East. In my column today I look at the 'equity risk premium' and other metrics that suggest relative U.S. equity and bond valuations are getting very stretched. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Good vibrations turn sour It's a "done" deal, according to U.S. President Donald Trump, although the he and Chinese leader Xi Jinping still have to finalize the wording of the trade agreement between the two superpowers and sign off on it. The main points of the deal appear to be: China will remove export restrictions on rare earth minerals and other key industrial components; U.S. tariffs on Chinese goods will total 55%; Chinese tariffs on U.S. goods will total 10%. Trump could not have been more enthusiastic in his praise for the agreement on Wednesday, and Commerce Secretary Howard Lutnick said 'deal after deal' with other countries will follow in the weeks ahead. Yet, judging by the relatively muted market reaction, investors are less enthused. And given the chaotic and unpredictable nature of the Trump administration's tariff announcements thus far, the irony of Treasury Secretary Scott Bessent calling on China to be a "reliable partner" in trade negotiations will not be lost on some observers. Especially, one suspects, in Beijing. Based on these proposed China levies, and with the US expected to conclude more trade deals in the coming weeks, the overall U.S. effective tariff rate will be lower than feared a couple of months ago. That's a relief. But the effective tariff rate of around 15% that many economists expect will still be significantly higher than the 2.5% rate at the end of last year, and would be the highest since the 1930s. Also, as the May inflation figures showed, tariffs have yet to be felt on prices. Investors - and Fed policymakers, who meet next week - are in a state of limbo. How will corporate profits and consumer spending be affected? What proportion of the tariffs will companies "swallow", and how much will they pass on to their customers? Zooming out, inflation appears to be cooling around the world, although this trend is expected to reverse once tariffs start to fuel higher goods price inflation. Figures on Wednesday showed that U.S. consumer inflation and Japanese wholesale inflation were lower than expected in May. These reports follow similar numbers from Europe recently, and China remains stuck in its battle against deflation. Next up is India, which releases consumer inflation figures on Thursday, which are expected to show annual inflation slowed to 3.0% in May, the lowest in more than six years. Another focus for investors on Thursday will be the auction of 30-year U.S. Treasury bonds. US stocks-bonds warnings flash amber again Calm has descended on U.S. markets following the 'Liberation Day' tariff turmoil of early April. But Wall Street's rally has revived questions about U.S. equity valuations, as stocks once again look super pricey compared to bonds. Since the chaotic days of early April, U.S. equities have rebounded fiercely, with the S&P 500 up 25%, putting the Shiller cyclically adjusted price-earnings (CAPE) ratio for the index in the 94th percentile going back to the 1950s, according to bond giant PIMCO. Stocks are looking expensive in absolute terms, and in relation to bonds. The equity risk premium (ERP), the difference between equity yields and bond yields, is near historically low levels. According to analysts at PIMCO, the ERP is now zero. The previous two times it fell to zero or below were in 1987 and 1996–2001. In both instances, the ultra-low ERP precipitated a steep equity drawdown and sharp fall in long-dated bond yields. "The U.S. equity risk premium ... is exceptionally low by historical standards," they wrote in their five-year outlook on Tuesday. "A mean reversion to a higher equity risk premium typically involves a bond rally, an equity sell-off, or both." But reversion to the mean doesn't just happen by magic. A catalyst is needed. Equities have recovered largely because they were oversold in April, trade tensions have been dialed down, and investors remain confident that Big Tech will drive solid AI-led earnings growth. So even though huge economic, trade, and policy risks continue to hang over markets, there is no sign of an imminent catalyst that would cause an equity market selloff. The flip side of equities looking expensive is that bonds look like a bargain. Indeed, the relative divergence between stocks and bonds is such that, by one measure, U.S. fixed income assets are the cheapest relative to equities in over half a century. Using national flow of funds data from the Federal Reserve, retired strategist Jim Paulsen calculates that the total market value of U.S. bonds as a percentage share of the total market value of U.S. equities is the lowest since the early 1970s. "Since the aggregate U.S. portfolio is currently aggressively positioned, investors may have far more capacity and desire to boost bond holdings in the coming years than most appreciate," Paulsen wrote last week. But bonds are 'cheap' for a reason. Washington's profligacy – the reason ratings agency Moody's recently stripped the U.S. of its triple-A credit rating – and inflation worries have kept yields stubbornly high. The term premium - the risk premium investors demand for holding long-term debt rather than rolling over short-dated loans - is the highest in over a decade, reflecting concerns about Uncle Sam's long-term fiscal health. And the diagnosis here shows no signs of improving. Trump's 'Big Beautiful Bill' is expected to add $2.4 trillion to the U.S. debt over the next decade, according to the nonpartisan Congressional Budget Office, likely putting more upward pressure on yields. Of course, equity investors do seem to be pricing in a very rosy scenario, and the past few months have shown how quickly the market landscape can change. The U.S. economy could weaken more than expected, the trade war could escalate, or there could be a geopolitical surprise that causes bond yields and equity prices to fall. Investors should therefore be mindful of the warnings being sent by ERPs and other absolute and relative valuation metrics. However, they should also remember that stretched valuations can get even more stretched. As the famous saying goes, markets can stay irrational longer than investors can remain solvent. What could move markets tomorrow? Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Daily Mirror
6 hours ago
- Daily Mirror
8 things you should worry about in spending review - from schools to pay packets
While there were big wins for the NHS and the Ministry of Defence, experts warn that things are not as rosy for other departments with a row brewing over policing Rachel Reeves today unveiled her long-awaited Spending Review, saying public finances are finally on an even keel. She told MPs that unpopular measures in Labour's first year had cleared up a lot of the mess left by the Tories. It came after Keir Starmer told his top team the review "marks the end of the first phase of this government". But experts have said that although there were big wins for the NHS and the Ministry of Defence, there were "less generous" settlements for other departments. And numbercrunchers warned that despite cash being ploughed into schools, headteachers still face headaches. There are also questions over public sector pay increases, and a row is brewing over funding for police services. Here we look at some of the key points. 1. Alarm over police funding One of the first out the traps to react to the statement was London Mayor Sir Sadiq Khan, who voiced his alarm about the impact on police. He said he is concerned the spending review could result in "insufficient funding for the Met and fewer police officers". Ms Reeves announced police spending will rise by 2.3% per year in real times up until 2029. The Lib Dems went further, accusing the Government of "sleight of hand". Numbercrunchers said the review's figures presume council tax will rise by £395 for the average Band D home by 2029. This would see a £14 rise for policing each year. The party's home affairs spokeswoman, Lisa Smart, said: 'The Government is relying on a hidden council tax bombshell to fund their half-hearted rise in police funding as they pass the buck to local families. 'After frontline policing was neglected for years under the Conservatives, local communities deserve better than this sleight of hand." Figures within the spending review reveal that core police spending power will go up by just 1.7% between 2025/26 and 2028/29. 2. Defence spending questions Ms Reeves said that defence spending will go up to up to 2.6% of GDP from 2027 - which we already knew. But she did not go any further on the Government's pledge to get to 3% - which she described as an "ambition". It comes after NATO chief Mark Rutte said member states should be aiming for 5%. And earlier this week he ominously warned that if cash is not committed, people might need to start learning Russian. 3. School budgets 'squeezed by free school meals' School budgets will remain under pressure in spite of today's cash injection - with much of it swallowed up by expanding free school meals, announced last week. Paul Whiteman, general secretary of the NAHT union - which represents school leaders - said "this is not a time for celebration". He added: "In light of ever-increasing costs, we are already seeing signs of schools having to make cutbacks, including to staff numbers. "We also know that some of the increase in funding will be absorbed by the increased free school meal costs schools will be facing after last week's announcement. There is no escaping the fact that despite the funding announced in this statement, schools will be operating in a challenging financial climate for some years to come." Institute for Fiscal Studies (IFS) director Paul Johnson added: "The schools settlement in England is tight. Strip out the cost of expanding free schools meals, and you get a real-terms freeze in the budget. "With falling pupil numbers, this would in principle allow a rise in spending per pupil. Instead, the Government may have to freeze spending per pupil in order to meet rising demand for special education needs provision." 4. What will the civil service have to stop doing? Cuts to unprotected departments risk having a "genuine impact on the government's ability to deliver on its missions", a union chief warned. Mike Clancy, general secretary of Prospect, said: 'The government will need to articulate much better what it wants the civil service to stop doing, given many essential government agencies are already facing recruitment and retention crises, particularly for specialist digital, scientific and technical staff. 'Only by investing in the skills it needs will it be able to achieve its objectives and undo the damage of the last 15 years.' 5. No leeway for public sector pay rises Another thorny issue that Government departments will have to face in future years is how to fund pay rises. The spending review document makes it clear that no more cash will be forthcoming from the Treasury - meaning bosses will have to find savings if their staff get a raise. The document says: "There will be no reserve access for public sector pay, if the PRBs (pay review bodies) recommend pay increases above the level departments have budgeted for, departments will need to carefully consider the justification for these awards.." It went to say bosses would need to "determine whether these additional costs can be borne either through off setting savings or through further productivity gains". 6. Looming questions over tax rises Ms Reeves closed off her speech by claiming the Government has turned a corner after a tricky Budget last autumn. She went as far as to say: "We will never have to complete a Budget like that again." But economists have warned that tax rises will inevitably follow. Stephen Millard, interim director of the NIESR economic research institute, said: "The Chancellor has yet again said that her fiscal rules are non-negotiable. "But, given the small amount of headroom at the time of the spring statement and the increases in spending announced since then, it is now almost inevitable that if she is to keep to her fiscal rules, she will have to raise taxes in the autumn budget." Raj Badiani, economics director at S&P Global Market Intelligence, said: "The goal of balancing books is likely to require a series of painful fiscal announcements… This year's autumn budget could be another tough fiscal event, should the UK economy falter amid heightened domestic and external tensions." 7. Fears raised over affordable homes pledge Housing campaigners welcomed the huge £39billion boost to affordable housing over the next decade - but warned that building social homes must be a priority. Currently, various types of housing are classed as 'affordable homes', including shared ownership, affordable rent, social rent, first homes Research by homelessness charity Shelter found that the current Affordable Homes Programme had delivered over 74,000 grant-funded affordable homes by March 2024. Only around 11,000 - just 15% - of these were genuinely affordable social rent homes. Speaking about the £39billion investment in a new Affordable Housing Programme, housing campaigner Kwajo Tweneboa said: "This announcement has potential - but without clear social housing targets, it risks becoming another promise that won't deliver change for the children and families who need it most." Mairi MacRae, director of campaigns & policy at Shelter, said the £39bn investment' is a watershed moment in tackling the housing emergency'. But she added: 'To truly tackle rising homelessness, it must come alongside a clear target for delivering social rent homes. For too long, past governments allowed thousands of social homes to be lost each year, while funnelling public money into so called 'affordable homes' which are priced far out of reach for many.' 8. Asylum hotel spending to continue One of the headline grabbing announcements in Ms Reeves' statement was that the use of asylum hotels will end by 2029. This will save £1billion a year, she told the Commons. But ministers have been urged to move faster, with Enver Solomon, chief at the Refugee Council, stating: "The deadline of 2029 feels far away, and we urge government to make it happen before then." And Gideon Rabinowitz, director of policy and advocacy at Bond - a UK network for international development organisations - hit out at the use of aid money to pay for accommodation in the meantime. He said: "While it is welcome that the Chancellor has committed to ending the use of hotels for asylum accommodation by the end of this Parliament, planning very slow reductions and diverting £5.76 billion of UK aid over the next three years to cover these costs is a political choice that comes at the direct expense of the world 's most marginalised people."
Reuters
7 hours ago
- Reuters
China puts six-month limit on its ease of rare-earth export licenses, WSJ reports
June 11 (Reuters) - China is putting a six-month limit on rare-earth export licenses for U.S. automakers and manufacturers, The Wall Street Journal reported on Wednesday citing people familiar with the matter.
