Tuesday, 29 November 2016

Russia's final winter planting figures just in

Russia reports that winter plantings are complete for harvest 2017.

Actually they go on to say almost complete, 99.9% complete, with some planting still taking place in the North Caucasus but these are effectively the final planting figures.

Total reported plantings now stand at 17.3 million hectares (17.1mha in 2015) so previous Ministry forecasts in excess of 18mha were way off the mark.

Wheat stands at 14.81mha; rye 1.64mha, barley 0.55mha and triticale 0.28mha.

The South accounts for 34.9% of the total area, Volga 26.4%, Central 22.6% and the North Caucasus 12.8%. 

Monday, 28 November 2016

Monday's Black Sea news roundup

Russia’s Ministry of Agriculture report that farmers have purchased 11% more fertiliser this year than last, which if read in conjunction with all the other announcements about increased productivity suggest farmers are heading for another bumper crop in 2017.

History, however, shows us that the correlation between fertiliser use in Russia and crop yield is weak, like no statistical correlation at all, kind of weak, so I wouldn't read too much into it.

Elsewhere and the Russian Government published a “significantly modified” draft of the quarantine phytosanitary control of imported planting seeds and planting materials regulations according to the USDA.

The inference seems to be that they are extremely bureaucratic, cumbersome and effectively amount to a trade barrier.  It’s being hammered out in the WTO as we speak so watch this space.

Meanwhile in the southern Russia region of Krasnodar Krai, an outbreak of African swine fever could disrupt grain exports if the Russian veterinary and phytosanitary service, Rosselkhoznadzor, decide to impose quarantine restrictions to prevent the spread of the disease.

The head of Rosselkhoznadzor, Sergei Dankvert, said that a decision on a quarantine zone would be made this week.  Watch this space.

Ukraine and the government has submitted to the Verkhovna Rada a draft law on the basic principles and requirements for organic production and certification.

I assume the standards will naturally be aligned to IFOAM standards thus allowing the eventual organic produce that will appear once this is all in place to be exported to the EU where the market for organic produce will be because I doubt very much if there will be any sizeable market in Ukraine.  

I’m sure someone has checked, watch this space.

Friday, 25 November 2016

This weeks Black Sea news and events roundup

Ukraine is launching a three year pilot project, initiated by International Finance Corporation (IFC), to improve quality of grain in Mykolaiv, Odesa, Kirovohrad and Poltava regions.

They don’t mention how they will do this but it will be interesting to hear the announcements should they make any.

Russian milk production is up 1.9% this year compared to the same period last year to 12.7mmt according to the Ministry of Agriculture who then go on to say the average milk yield is 4,976kg per cow, up 192 kg (4%) but fail to mention how long the lactation of that cow is.

Russian pig production is also up, this time by 13.5% in live weight compared to the same period last year and amounted to more than 2.8 million tons while, Rusagro, one of Russia’s largest agri holdings, announced the construction of new pig-breeding complexes with the combined capacity of 45,000mt live weight.

Russia has also just opened a large-scale distribution and logistics centre for fertiliser, machinery and plant protection products in Krasnodar Krai.

The International Grains Council (IGC) gave nothing to farmers when they published their latest forecast for 2016/17 total world grain, up 8mmt on previous year at 2,077mmt, due in part to a larger Black Sea wheat crop.

Property agents Brown & Co have opened an office in Romania expanding their influence in Eastern Europe saying the country could be one of the most lucrative farmland markets of the future.

Egypt confiscated 18,000mt of Russian wheat at one of their ports this week, not for ergot as you might expect given their stance on that touchy subject but for insects.

Animal nutrition company Nutriad, analysed 73 wheat samples from across Poland and found 70% were contaminated with DON and 30% with ZEN and HT2-toxin adding more weight to the argument that this year’s wet season has caused quality issues right across Europe and the Black Sea.

The latest USDA weather update for Ukraine and western Russia reported cooler weather with widespread rain and snow.

This week saw us try our hand at flying a drone across some wheat in central Russia, which we hope to be doing more of during next years crop tours, you can see the footage here.

Next week and I’m off to the UK’s CropTec show, the essential technical and business event for arable and mixed farmers, which will be packed with innovative features and content, apparently. Drop me a line if you want to meet up for a pulled pork roll.

Right then, where is my tweed jacket, checked shirt, chino's and brogues?

Thursday, 24 November 2016

November Black Sea crop reports now available

Earlier this month we completed a 1,600km crop tour of Russia and Ukraine specifically to look at the post planting condition of wheat prior to winter.

Reports and short videos for each countries tours are now available (priced $250), drop me a line if you would like to purchase copies and and support our efforts to bring independent insight into one of the most important crop producing regions of the world.

Russian pig production up 13%

Russian Ministry of Agriculture report that for the first 10 months of this year, pig production
increased by 13.5% in live weight compared to the same period last year and amounted to more than 2.8 million tons.

Last week, one of Russia’s largest agri holdings, Rusagro,  announced they had approved the construction of three pig-breeding complexes in Tambov with the production capacity of 40-45,000mt live weight.

The project has been approved by the Ministry of Agriculture and had a total investments estimated at 7.5 billion RUB (116 million USD).

During October, the average price of pigs live weight was 100 RUB/kg (1.55 USD/kg).

Wednesday, 23 November 2016

Russia harvest 75mmt of wheat

Russian Ministry of Agriculture report the 2016 wheat harvest reached 75.8mmt, 19% more than last year (63.9mmt in 2015).

Yield was 2.79mt/ha across 27.2mha which compares with 2.51mt/ha across 25.5mha in 2015.

Although production is up 19% on last year, yield per hectare is up 11%, which is good but in my opinion comes from weather rather than fundamental changes in management.

Essentially 2016 was a wet year and crops grew.

The rest of that increase in output has come from an increase in hectares, up 7% year-on-year.

So, just for example, if this years yield had been the same as the three year yield average then output would have been 65mmt.

My point being that if in 2017 we have a dry or hot year or general weather conditions are not conducive to crop growth then even with extra hectares, overall production would drop significantly.

And after four good years in a row, Russia is overdue a difficult growing season.

Latest USDA weather update for western FSU

Cooler weather returned, accompanied by widespread rain and snow in western and southern portions of the region.

After last week’s warmth, near- to below-normal temperatures (up to 4°C below normal) ensured winter crops remained dormant and resistant to freeze injury across all but southern-most growing areas.

However, weekly average temperatures were below 5°C even in southern Ukraine and the Southern District — save for the immediate Black Sea Coast — indicating southern winter wheat was easing toward dormancy.

A fresh snowfall blanketed winter crop areas early in the period, though somewhat warmer conditions during the latter half of the week eroded the snow depth and coverage; at week’s end, snow was shallow (2-10 cm) and mostly confined to central and northern Russia.

Early-week rain and snow (10-50 mm, liquid equivalent) over the southern half of the region hampered late corn harvesting in Ukraine but maintained abundant moisture reserves for winter crops.

Thursday, 17 November 2016

Ukraine harvest 59mmt of grain

Ukraine Ministry of Agriculture report the current harvest stands at 59.2mmt of grains (58.4mmt in 2015) from 13.3mha or 93%.

The overall average yield is 4.46 mt/ha with the breakdown looking like this;
  • corn 20.2mmt from 3.2mha (77%) with an average yield of 6.21mt/ha
  • sunflower 13.2mmt from 5.8mha (97%) with an average yield of 2.23mt/ha
  • soya 3.9mmt from 1.7mha (95%) with an average yield of 2.28mt/ha

As of November 8, farmers had planted 6.9mha of winter crops for H17 or 94% of the planned area, up 316kha on 2015.

This includes 5.8mha of winter wheat and triticale, 866kha of winter barley, 157kha of winter rye and 836kha of winter oilseed rape.

Wednesday, 16 November 2016

Russia's agricultural policy for the next four years

Russia’s Minister of Agriculture, Alexander Tkachev, reported to the plenary session of the Federation Council on the preliminary results for the agricultural sector 2016.

He started of by saying that although the country is going through a difficult economic period, agriculture is providing a bed of stability, which is not something you often hear said about farming.

He then referenced the continued government support for the industry before going on to highlight this year’s grain crop of 117mmt which is the highest for the last forty years.

To further ensure food security he talks about horticultural output, specifically the production of greenhouse vegetables.  The Minister states that it is necessary to increase production by one million tonnes by 2020 which will require the construction and modernisation of two thousand hectares of greenhouses for the next five years.  (If you build and commission greenhouses, now might be a good time to apply for a Russian business visa).

Fruit was the next topic with similar talk of increased productivity this time by 30% with an extra 72 thousand hectares of orchards which will increase fruit production to 500 thousand tonnes in five years’ time.  Sounds easy when you put it like that.

He then highlights the 2016 livestock sector so far including a 5% increase in livestock and poultry output, 14 million tonnes of live weight produced, meat exports growing by 60% and exceededing 150 thousand tonnes.

This is followed by forecasts including an increase in cattle and poultry live weight production by 10% that will reach almost 15 million tonnes by 2020.

Milk production is forecast to increase by 3% per year, domestic dairy products increase to 7 million tonnes by 2020 (replacing 4 million tonnes currently imported from Belarus so no quarter given there to the Eurasian Economic Union).

To achieve this extra productivity in the dairy sector it will be necessary, naturally, to modernise the existing production facilities which will be achieved through a series of direct and indirect subsidies, intervention to form fair prices for milk (like that works), protect domestic producers from unfair competition (selective use of WTO?), work with the Customs Union on technical regulations, increase fines and adjust the balance and volumes of dairy products imported into Russian.

In other words plenty of carrot, plenty of stick.

Farm machinery and the policy is more of the same; continued state support for manufacturers; domestic equipment purchases increasing from 40% to 55% and a pledge to maintain the level of subsidies for agricultural machinery to keep pace with the acquisition of new agricultural machinery as old kit is disposed.  (If you’re an international machinery manufacturer or dealer, probably no need to apply for that new Russian visa).

There was then talk of streamlining and simplifying the subsidy administration with a unified regional subsidy beginning in 2017.

So, there you have it, the Russian agricultural policy for the next few years will be a bit like a matreshka doll, a gift that just keeps giving.

Latest USDA weather update for western FSU

Warmer weather returned, accompanied by widespread rain and snow in western and northern portions of the region.

After recent cold weather ushered winter wheat into dormancy in all but southern-most growing areas, a strong southerly flow caused daytime highs to jump into the teens (degrees C) from central Ukraine into southern Russia, with lower to middle 20s observed closer to the Black Sea Coast.

The anomalous warmth (up to 8°C above normal) melted much of the region’s snow cover and reduced winter crop cold hardiness.

Moderate to heavy rain and wet snow (10- 65 mm liquid equivalent) accompanied the warm air’s arrival from Ukraine and Belarus into central and northern Russia, maintaining abundant to excessive moisture supplies for dormant winter crops.

At week’s end, the wildly fluctuating temperatures continued, as sharply colder air along with locally heavy snow and ice returned to western and northern portions of the region.

Tuesday, 15 November 2016

Ukraine agricultural exports reach $10 billion

Ukraine’s Ministry of Agriculture report that over the first nine months of 2016 the country exported $10.4 billion worth of agricultural products.

This represents around 40% of total exports highlighting the significance farming has in the re-developing Ukrainian economy and is up slightly on the same period last year when they exported $10.2 billion worth of agricultural products.

Ukraine’s State Statistics Service report that from January to September this year, the largest export sector was plant products worth $5.5 billion representing around 21% of the total exports including $4.2 billion of cereals (16% of total exports).

Fats and oils of animal or vegetable origin came in next with $2.7 billion worth of exports accounting for around 10% of total exports, finished food products worth $1.6 billion (6.2% of total exports) and $0.5 billion (2.1%) worth of live animals and animal products.

During the same period Ukraine imported $2.78 billion of agricultural products representing 10% of total imports leaving a positive balance of trade of agro products of $7.6 billion.

Russia harvest over 121mmt of grain

Russian Ministry of Agriculture report the current harvest stands at 121.8mmt of grains from 45.2mha (43.8mha in 2015) or 95.7%.

The overall average yield is 2.69mt/ha compared to 2.45mt/ha in 2015 with the breakdown looking like this;
  • corn 11.4mmt from 2.0mha (69%) with an average yield of 5.69mt/ha
  • sunflower 10.4mmt from 6.6mha (88%) with an average yield of 1.58mt/ha
  • soya 3.1mmt from 2.0mha (93%) with an average yield of 1.54mt/ha
As of November 14, farmers had planted 17.2mha of winter crops for H17 or 99% of the planned area (16.2mha in 2015).

Monday, 14 November 2016

Early season forecast on Russian grain exports revised downwards

Analysts are starting to rein in their forecast on Russian grain exports made earlier in the season.

Previously high predictions were driven by reports of record breaking crops and the not unreasonable assumption that all this extra grain would find a home outside Russia.

But it seems that as questions started to be asked about the quality of that grain, previous record breaking export forecast have started dropping.

The Russian Ministry of Agriculture now report their grain export forecast for July 2016 to June 2017 is 35mmt, down from 40mmt, including wheat from 30mmt to 28mmt.

Rusagrotrans forecast 35.4mmt, down from 37mmt, including wheat down from 28mmt to 27mmt and IKAR lowered their forecast from 40mmt to 39.4mmt including wheat from 30mmt to 29.5mmt.

Russia’s Ministry also  reported that, as of November 9, grain exports for MY16/17 are down nearly 5% on the same period last year at 14.017mmt (14.706mmt in 2015).

Rusagrotrans initial October export forecast was 3.7mmt, but they say that due to bad weather, specifically wind keeping water levels low in the Azov and stormy conditions in the deep water Black Sea ports, it dropped to 3.2mmt, 

Russia has the capacity to handle around 4.0mmt of grain exports each month so they could still, in theory, export a further 32mmt on top of the 14mmt already shipped.

Except that quality issue still hasn’t gone away.  Couple of weeks back Russia’s phytosanitary service released a report (here) on barley quality saying that many experts had called into question the quality of this year’s crop without having any reliable data. 

To be fair they didn’t shy away from the results which showed that only 4% of the sample was 1st class compared to 14% last year.  My assumption was they would conduct a similar survey for wheat but I haven’t spotted anything yet.

Friday, 11 November 2016

Ukraine €400 million EIB agri-loan one step closer

Ukraine’s Minister of Agriculture, Taras Kutovyi, met with the Vice President of the European Investment Bank (EIB) to discuss a project which will provide €400 million worth of credit for small and medium farmers to make a “qualitative leap in the development of domestic agriculture”.

Bearing in mind that farms classed as small and medium in size in Ukraine are holdings that measure in thousands of hectares then this is not necessarily about subsidising small holdings.

The Minister said at least 70% of the fund will go to SME’s with public sector operators, research stations, laboratories, institutions and the like receiving 30%.

The project is expected to run from 2016 to 2020 with loan terms over 12 years with a grace period of four and is expected to be 50% co-funded with Ukraine banks.

Eligible project subject areas include primary grain and oilseed production and drying, cleaning, sorting, testing and storage of grain and oilseed.

Thursday, 10 November 2016

Latest WASDE Black Sea report highlights

Latest WASDE report is out, here’s some highlights.

WHEAT:  Projected 2016/17 production for Black Sea remains unchanged at Russia 72.0mmt; Kazakhstan 16.5mmt; Ukraine 27mmt.

The largest beginning stocks change is for Ukraine on expectations of lower food use offsetting higher feeding. 

Global use for 2016/17 is raised 0.8 million tons led by increases in feed use for Ukraine, Canada, and Russia but partially offset by reduced food use in Ukraine. 

As global supplies are rising faster than use, ending stocks are raised 0.9 million tons and remain record large. 

COARSE GRAINS:  Projected 2016/17 production for Black Sea and FSU-12 increases 3.1mmt to 168.5mmt with FSU-12 now 90.4mmt; Russia 40.0mmt; Ukraine 38.1mmt.

Corn, projected 2016/17 production for FSU-12 and Ukraine has increased 2.5mmt with FSU-12 gaining an extra 1.5mmt to 45.5mmt and Ukraine gaining an additional 1.0mmt to 27.0mmt.

Ukraine corn production is raised based on near-record yields reported by the government and Russia corn production is higher this month with a projected record yield, based on harvest results to date. 

(Latest official figures place the Ukraine corn harvest 70% complete and the Russian corn harvest 64%; based on the amount of standing corn we saw on last week’s crop tour would suggest these figure are perhaps wishful reporting).

Corn exports are projected higher for Ukraine and Russia.

Wednesday, 9 November 2016

Ukraine harvest 57mmt of grain

Ukraine Ministry of Agriculture report the current harvest stands at 57.2mmt of grains (57.7mmt in 2015) from 13.0mha or 91%.

The overall average yield is 4.40 mt/ha with the breakdown looking like this;
  • corn 18.1mmt from 2.9mha (71%) with an average yield of 6.07mt/ha
  • sunflower 12.7mmt from 5.7mha (97%) with an average yield of 2.23mt/ha
  • soya 3.8mmt from 1.6mha (92%) with an average yield of 2.26mt/ha
As of November 8, farmers had planted 6.8mha of winter crops for H17 or 93% of the planned area, up 328kha on 2015.

This includes 5.8mha of winter wheat and triticale, 851kha of winter barley, 157kha of winter rye and 819kha of winter oilseed rape.

Russia harvest 120mmt of grain

Russian Ministry of Agriculture report the current harvest stands at 120.3mmt of grains from 45.0mha (43.8mha in 2015) or 95.3%.

The overall average yield is 2.68mt/ha compared to 2.44mt/ha in 2015 with the breakdown looking like this;
  • wheat 75.8mmt from 27.2mha (98%) with an average yield of 2.79mt/ha
  • barley 19.1mmt from 8.1mha (97%) with an average yield of 2.35mt/ha
  • corn 10.5mmt from 1.9mha (64%) with an average yield of 5.64mt/ha
  • sunflower 10.1mmt from 6.4mha (86%) with an average yield of 1.58mt/ha
  • soya 3.0mmt from 1.9mha (89%) with an average yield of 1.55mt/ha
As of November 8, farmers had planted 17.1mha of winter crops for H17 or 99% of the planned area (15.8mha in 2015).

Latest USDA weather update for western FSU

Cold weather persisted, with the season’s first snow observed across central and northern growing areas.

Temperatures during the period averaged 2 to 4°C below normal, with winter wheat dormant in all but southern-most portions of the region.

Widespread moderate to heavy precipitation (10-50 mm liquid equivalent) was reported, though amounts were somewhat lighter (less than 10 mm) in south-central Ukraine.

Snow was reported from northern Ukraine into central Russia, though warmer weather changed the precipitation over to rain during the latter half of the period.

Nevertheless, snow cover (5-20 cm) was widespread at week’s end from northeastern Belarus into central Russia.

Tuesday, 8 November 2016

Final Black Sea crop tour of 2016 safely home

Back in the office after a busy week on the road assessing winter wheat in Russia and Ukraine.

I am now writing up our observations and assessments of the wheat but also some additional thoughts on the current corn crop.

I will be updating out crop tour Twitter account @BSCT_01 with pictures and video so if you subscribe be sure to check them out.

If you're not subscribing but think you might like to then feel free to drop me a line for details.

Thanks go to all those who helped out on this and the previous tours throughout 2016, couldn't do it with out you.

Latest USDA weather update for western FSU

The weather pattern remained stagnant, with cold, dry conditions in the east contrasting with moderate to heavy rain in western-most portions of the region.

For the second consecutive week, moderate to heavy rain (10-60 mm) was reported from Moldova northward into western Belarus, maintaining adequate to abundant soil moisture for winter crop establishment.

Elsewhere, dry weather facilitated seasonal fieldwork, including corn and sunflower harvesting in Ukraine.

Temperatures for the week averaged 3 to 6°C below normal from central Ukraine into Russia, with hard freezes (-10 to -2°C) reported in all but the southern-most winter wheat areas.

Winter wheat entered dormancy from central Ukraine into northern and central portions of Russia’s Southern District (as far south as the Rostov Oblast), where 14-day average temperatures were below 5°C.

Weekly average temperatures above 5°C were confined to the immediate Black Sea coastal areas, indicating wheat was not yet dormant.