Earlier this week Ukraine’s ministry of agriculture reported harvest was 99% complete with 14.5mha producing 60mmt of grains and leguminous crops yielding an average 4.1mt/ha.
In 2014 Ukraine produced 63.8mmt (4.3mt/ha) and 63.0mmt (3.8mt/ha) in 2013 so although this year’s total crop is down the yield per hectare compares favourably.
Every year is difficult in farming but this last year in Ukraine was another difficult year after a succession of difficult years.
The fact that Ukraine farmers still managed to produce a 60mmt crop given the high cost of production, low commodity prices, limited credit and diminishing cash reserve is testament to the ability and progress Ukraine agriculture is making and indicative of where it could get to in the near future.
If Ukraine can produce a 60mmt crop in difficult political and economic circumstances and with no cash, imagine what it could do with investment.
The weather plays a big part in determining yields and although 2015 started off hesitantly with overwintered crops in some regions looking a bit worse for wear, by and large crops across the country looked very good post winter and throughout the season.
During 2015 we crossed the country on several occasions assessing the condition of the crops and although we scored more rigorously than the self-assessment scores the ministry produce I have rarely seen better looking crops in Ukraine (drop me a line if you would like to see those reports).
Looking forward and new cereal crop planting has reached 6.7mha, down 10% on the forecast.
This includes 5.6mha of winter wheat, down 550kha and 879kha winter barley, down 167kha.
Spring planting will take up some of this slack but not all of it and the spring crop will yield lower than winter crops so total production will be down.
How this impacts on next season’s exports is the current topic of conversation.
The ministry (or at least one spokesperson) is perhaps being overly pessimistic when talking of 3.5mmt wheat exports, the USDA are widely optimistic at 15mmt and will adjust this with the next release of data.
With the planting season now closed the variables in determining how much will be exported will be Ukraine’s policy on exports and how the crop yields overall?
Despite the pessimistic noise from the ministry, exports will likely remain bullish as this is the only credible source of income outside IMF handouts.
Crop yield is on the back foot in south and east Ukraine with delayed germination but it has improved slightly in recent weeks and other regions are reporting that the crop is looking good (at least my contacts are reporting to me).
The key now will be the condition of the crop when it emerges from the winter.
Don’t write off Ukraine exports just yet.