Wednesday, 27 May 2015

Ukraine & Russia mid-week review

Russia and Ukraine spring plantings are in the closing stages and we are starting to see the final numbers.

In Russia spring wheat and barley hectares are down 13% and 15% on the same point last year with a combined shortfall of 2.1mha.  

Wet weather has been the official reason for the shortfall but state induced low prices and another wheat export tax already being talked about days after the previous export tax was lifted won’t have helped.

Sunflower plantings are down 11% which is 600,000ha on last year so I would anticipate that getting closer over the next five days.

Corn is up 4% on last year but a drop in average yield of only 200kg/ha would cancel that out so I wouldn't consider it to be all that significant.

Soya is up around 8% but as a low yielding crop that would only equate to an additional 134,000mt on a national yield of around 1.5mmt and equally could be wiped out with a drop in average yield of 100kg/ha or so.

Potatoes and vegetables plantings are up 40% on last year as farmers capitalise on the food embargo which, following a clear heads up from the new Minister of Agriculture this week, won’t be going away any time soon.

Over in Ukraine corn plantings are down 15% with 600,000ha behind last year which I don’t see catching up much in the next week because farmers opted to use more home grown varieties in a bid to conserve cash and these will not have the low days to maturity characteristics needed this late on.

If these proportions stay broadly the same through to the end of plantings then the crop will need to produce an additional average yield of 700kg/ha plus to fill the shortfall on last year; not something that is at all likely to happen as along with using domestic seed to save costs farmers have been cutting fertiliser rates.

I would give you some numbers on Ukraine’s cereal crops but the Ministry hasn't been clear on that of late but the Minister of Agriculture is to give a press conference on spring plantings tomorrow lunchtime so hopefully we will have a better picture by then.

Still in Ukraine and in an effort to stimulate the livestock sector the government is considering plans to reimburse farmers 50% of the cost of new animals up to 12,000 UAH (550 USD) per head as well as the costs of construction and reconstruction of livestock facilities.  It was also suggested that they will commission 190 livestock farms including 100 dairy farms, 50 pig farms and 20 poultry farms during 2015-16.  It will be interesting to see where the funding comes from.

Back in Russia and the Sugar Producers' Union said that up to 90,000ha of beet crop could be damaged by strong winds in the Central Federal District which has just been confirmed by a contact of mine who said the damage is substantial in his area and has affected sunflower too.

We used to plant barley or straw between the rows to stop windblow, perhaps I should tell them.

I received reports this week that “dryland wheat in southern Russia was starting to suffer from a cumulative lack of rain" and recent high temperatures and “rain is sorely needed in central Russia” particularly where they have finished plantings.

Following a quick trip out of the office yesterday I also confirmed that wheat in Kursk is starting to show signs of drought (pictured) although as I write the skies have clouded over and the air is heavy with thunder which is about right as I'm off to a barbecue tonight.

Crimea mentioned that irrigated land is down to 13,000ha from 140,000ha in 2013 as no alternative water sources have been provided by authorities after Ukraine closed off the North Crimea Canal following the Russian annexation in 2014.

Still in Crimea and the regional head got his excuse in early and saying they need 3bn RUB state support to buy 700 machines for planting and harvesting to realise a successful harvest.  I assume he realises Crimea will start harvest in a couple of weeks’ time so he needs to get his skates on to secure funding, place an order, take delivery and assemble a fleet of combines.

Also getting his excuse in early is Rostov's Minister of Agriculture who announced today that 2015 harvest will be 20% down on last year (down from 9.5mmt to 7.7mmt) mentioning a dry autumn and a lack of bank credit as the main problem.

And finally, only days after lifting its export tax on wheat Russia is suggesting it might tax wheat exports again in order to protect livestock farmers from rising feed costs but fail to mention how they will protect grain farmers from low prices.

A quick reminder that we are taking subscriptions for the next Crop Tour which is now scheduled for second week of June and that I will be in touch with those who have expressed an interest once I can get my IT systems functioning properly.

Right, I'm off to throw a shrimp on the barbie.