Little optimism in Black Sea forecast

Acreage decline | Tight money and dry conditions will likely reduce crops in Russia, Ukraine and Kazakhstan

Decreased acreage, a lack of financing and troubling weather are hurting Black Sea crop prospects, says an analyst from that part of the world.

“There are a lot of signs showing that the 2014 harvest won’t be the same as 2013,” said Olivier Bouillet, executive director of Agritel International, which bills itself as the European leader in agricultural marketing expertise.

Winter crops were delayed by two to three weeks because of excess rainfall, but a mild fall allowed crop development to catch up before winter dormancy.

Ukraine’s winter crop area declined by 4.4 percent from 2013, including a six percent drop in winter wheat plantings, which accounts for 97 percent of the country’s annual wheat output.

It isn’t a big decline, but much of it occurred in the north and central regions, which are two of the country’s most productive regions.

Russia’s winter grain planting fell by six percent, but the 30.2 million acres of winter wheat was in line with last year. Winter wheat accounts for 49 percent of Russia’s total wheat production.

Kazakhstan doesn’t plant much winter wheat.

Crop conditions for the winter crops are generally good, and losses are expected to be six to seven percent, which isn’t bad.

However, Bouillet doubts the area will be reseeded in the spring because of a lack of financing.

In addition to winter wheat problems, there are doubts about spring crops.

Spring seeding in Ukraine is about two weeks ahead of last year’s pace. Growers have planted 1.7 million acres.

Planting won’t begin on a wide scale in Russia until April. Russia’s agriculture ministry forecasts 74.8 million acres of spring grain, which is about the same as last year.

Much of the Black Sea region is becoming increasingly dry, with most crop growing areas receiving 50 percent of normal rainfall in the past six months.

“Soil reserves are quite low for sure. Lower than last year,” the Kiev-based Bouillet told a recent webinar organized by DTN.

The forecast calls for above normal temperatures for the next 15 days, which is good for seeding and germination but could exacerbate the dry conditions.

A particularly critical time for rainfall will be in the April 20 to May 1 period.

“Otherwise, for sure there will be an impact,” said Bouillet.

Poor profit margins last year will influence crop input decisions this year. Margins for all major crops were down significantly from 2012 levels. Corn was the worst, with growers earning $40 per acre compared to $240 the previous year.

Widespread currency devaluation in all three Black Sea countries is also reducing farmers’ purchasing power.

Bouillet expects most farmers, including large operations, to use less fertilizer, quality seed and pesticides in 2014 compared to last year.

The upshot of the smaller winter grain acreage, dry weather, poor 2013 margins and currency devaluation will be reduced production from a key grain exporting region of the world.

For the region, Agritel forecasts 85.5 million tonnes of wheat production, down from 89.8 million tonnes last year. Barley production is expected to fall to 25.7 million tonnes from 26.5 million tonnes. Rapeseed output is expected to drop to 3.3 million tonnes from 3.6 million tonnes in 2013.

And those are the most optimistic forecasts.

“The figures that are here are, for us, the upper (end) of what is today possible,” said Bouillet.

He said production could easily fall below those levels with farmers opting for poor quality inputs, especially if the much-needed spring rains fail to materialize.

Agritel sees smaller 2013-14 Black Sea wheat exports than the U.S. Department of Agriculture.

It recently lowered its Ukrainian wheat export number to 9.5 million tonnes because wheat has been taking a back seat to corn exports in that country. The USDA’s forecast is for 10 million tonnes.

Crimean ports accounted for less than 10 percent of Ukraine’s grain exports, so Russia’s annexation of the region shouldn’t have much impact on Ukraine’s exports.

The analyst is forecasting 16 million tonnes of Russian wheat exports compared to 17.5 million tonnes by the USDA. Agritel said Russia is having difficulty sourcing wheat from Kazakhstan for export.

Agritel is forecasting 7.8 million tonnes of exports from Kazakhstan, which is higher than the USDA’s estimate of 6.5 million tonnes. However, Agritel’s number includes wheat flour.

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