New Market Research Report: Russia Agribusiness Report Q3 2016

Russia's poultry and pork sectors will perform strongly as consumer demand is growing and domestic production is looking to bridge the gap left by EU imports , which will not resume until H216 . Wheat will outperform the grains complex out to 2020 due to elevated farmgate prices in rouble terms and strong opportunities on the domestic and export markets , which will maintain production incentives. The Russian dairy sector will benefit from growth momentum until 2017 due to the EU embargo . In particular, cheese production will see solid gains in a bid to gain market share. Afterwards, dairy producers will face lower subsidies and lower prices , which will lay the foundations for consolidation in the industry.Key ForecastsWheat production growth in 2016/17: 1.6% y-o-y to 62.0mn tonnes. We maintain our 2016/17 wheat production forecast at 62.0mn tonnes. Higher winter wheat acreage and warm weather over Q415-Q116 underpin our bullish view on the 2016/17 harvest.Corn production growth in 2016/17: 0.6% y-o-y to 13.1mn tonnes. We have revised downward the growth trajectory of our corn production forecasts and now expect continuous declines from 2017/18 onwards.Cheese production growth in 2015/16: 5.0% y-o-y to 893,000 tonnes. We have revised upward our cheese production forecasts due to a stronger boost from the import ban than we initially expected. We now forecast output to reach 893,000 tonnes in 2015/16, representing solid growth of 5.0% y-o-y after growing by 11.8% y-o-y in 2014/15.Poultry production growth in 2015/16: 4.2% y-o-y to 3.7mn tonnes. Poultry production will continue to outperform the livestock complex as producers benefit from an absence of imports until H216. After the initial headwinds of a return of imports in 2016/17, production will remain strong due to stable domestic demand as macroeconomic growth starts to pick up.Pork production growth in 2015/16: 5.0% y-o-y to 2.7mn tonnes. Over 2015/16, we forecast strong growth in pork production as the domestic sector is well-positioned to take advantage of the decreased import supply following the import ban of Western products.2016 real GDP growth: -1.2% y-o-y. An increase compared with -3.7% in 2015.2016 consumer price inflation: 7.8% y-o-y average. A decrease compared with 15.6% in 2015.Industry DevelopmentsWheat production will outperform the grains complex out to 2020 due to elevated farmgate prices in rouble terms and strong opportunities on the domestic and export markets. Corn output will fail to maintain its strong recent growth due to lower imports of high-quality seeds.The Russian dairy sector will benefit from a growth momentum until 2017 due to the country's ban on EU food imports. In particular, cheese production will see solid gains in a bid to gain market share. Afterwards, dairy producers will face lower subsidies and lower prices which will lay the foundations for consolidation in the industry. We believe the government will struggle to maintain subsidies for dairy prod

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