Monday, 11 January 2016

Last weeks Black Sea agri-news

Last week was a quiet news week in the Black Sea region as businesses and government departments shut down for the orthodox Christmas holiday.

The main story was the weather as low temperatures and patchy snow left some crops exposed to an increased risk of winter kill.

Some crops in south and east Ukraine and central Russia had to endure very low temperatures with no snow cover and some damage will have been done but the market seemed happy to take the satellite data at face value and decide it wasn't an issue.

What seemed to happen was the data indicated that it was snowing but didn't take into account that the actual amount of lying snow was less than 3cm and insufficient when night-time temperatures dipped to -22oC.

By midweek plenty of snow had fallen and temperatures lifted alleviating any further risk for now but also covering up any damage which we won’t be able to assess until the spring Crop Tour scheduled for end of March.

Although markets remain resolutely bearish there are plenty of commentators making bullish weather related references including UkrAgroConsult who reported Ukrainian wheat exports are likely to drop sharply next MY on the back of reduced plantings and the poor start to the growing season.

Also worth keeping in mind there is still a lot of winter to go before crops are safe and I am now hearing concern in some regions that increasing temperatures might reduce snow cover and expose crops to the next wave of cold weather forecast for next week.

Meanwhile in other news, the Ukraine-EU free trade agreement came into force which eliminates tariffs on 97% of Ukrainian goods including some grains & food products.

Ukraine's ministry of agriculture continue their bullish position saying they will support the restoration of irrigation systems and are ready to establish transparent and clear tariffs to encourage inward investment.

Over in Russia the ministry of agriculture appeared to start the holiday early releasing very little news outside the standard “everything is great” press releases including milk production up 2.2% on last year, eggs up 3% and poultry 8.6%.

The babycham might have been opened a little early in one department when it was reported that Russia is contemplating prohibiting state purchases of imported agricultural machinery as ministries look to extend the import substitution policy.

However the same department conceded that it was probably unworkable anyway as imported components are used extensively in domestic machinery fabrication but I bet it still made a few at John Deere miss a heartbeat.