"Kazakhstan Agribusiness Report Q2 2014" now available at Fast Market Research

We expect the Kazakh grain sector to outperform the rest of the agricultural complex, especially as Kazakhstan is expected to see increased export opportunities to Central Asia and China. We expect limited growth for the livestock and dairy sectors, as export potential for both industries will remain limited. Only domestic demand, which we expect to be strong, could encourage domestic production somewhat. That said, cheap imports from Russia could put local growers at a disadvantage. We have not identified any major public company operating in the sector that we would highlight.

Key Forecasts

* Wheat production to 2017/18: 79.3% to 18.8mn tonnes. The spectacular growth has to do with base effects, as production slumped in 2012/13. We expect growth over the coming years to be subdued as efforts to diversify into oilseeds and other field crops, as well as little potential for a repeat of the perfect conditions of 2011/12, limit potential.
* Cheese consumption growth to 2018: 39.8% to 87,900 tonnes. This will be a result of increased demand for value-added dairy products on the back of accelerating urbanisation and improvements in infrastructure.
* Beef production growth to 2017/18: 43.7% to 610,800 tonnes. The comprehensive overhaul of the beef herd continues apace as imported breeding stocks improve quality.
* 2014 real GDP growth: 5.5%, up from 5.4% in 2013.
* 2014 average consumer price inflation: 5.2% year-on-year (y-o-y), down from 5.8% y-o-y in 2013.
* BMI universe agribusiness market value: 15.2% y-o-y increase to US$12.4bn in 2013/14, forecast to grow on average 16.0% annually between 2012/13 and 2017/18.

Full Report Details at
- http://www.fastmr.com/prod/782564_kazakhstan_agribusiness_report_q2_2014.aspx?afid=301

Industry Outlook

We have revised down slightly our forecasts for Kazakhstan's 2013/14 wheat production to 15.5mn tonnes (from 16.5mn tonnes previously) in line with official estimates. This still represents an increase of 47.6% on the 2012/13 level, as yields have almost doubled and area harvested has also increased. The US Department of Agriculture estimates yields at 1.2 tonnes per hectare (ha) for 2013/14 (compared with 0.8 tonnes/ha in 2012/13) and area harvested at 12.5mn ha (compared with 12.4mn ha in 2012/13). In 2014/15, we expect production to increase further to 16.7mn tonnes, 8.0% higher y-o-y. This will be the result of a moderation in the corn/wheat price ratio just before the planting season started in the country. The price ratio reached a high of 1.0x in May 2013 and came down to 0.6x in November. In addition, we believe wheat yields are still very low by global standards and see more room for growth in the near term.

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