(Reuters) — Prospects for Ukraine’s winter crops and spring-sowing campaign remain favorable, the U.S. Department of Agriculture said on Wednesday, although a weakened currency could eventually curb the use of imported inputs such as hybrid seeds.
“Conditions have been generally favourable for winter crops,” the USDA’s Foreign Agricultural Service said in a report.
“The country’s wheat crop is already in the ground, and the availability of most inputs for spring sowing — including fuel, fertilizer, seed and credit — has not been interrupted,” it said.
The report did not make mention of the political instability that has rocked Ukraine. Russian troops have seized control of Ukraine’s Crimea peninsula region, where separatists have taken over the provincial government and are preparing for a referendum on Sunday in an effort to make the region part of Russia.
Anticipation of the USDA’s report, as well as fears that it might say something about tightening grain supplies in the Black Sea region, helped boost Chicago Board of Trade wheat futures on Tuesday by 2.7 percent, traders said.
CBOT wheat surged another 3.8 percent on Wednesday, partly on fears that political turmoil in Ukraine could disrupt grain shipments.
Ukraine produced 30.9 million tonnes of corn and 22.3 million tonnes of wheat in the 2013-14 marketing year, the USDA estimates. The country is the world’s No. 3 corn supplier and a significant exporter of wheat.
Access to credit for Ukrainian agricultural enterprises has not been impeded, USDA’s report said.
“Seed companies report that sales are proceeding as usual, and fertilizer and fuel are being delivered on time as well,” it said.
However, it also said: “Escalating prices for imports, resulting from a decline in the exchange rate for the Ukrainian hryvnia, could have an impact on the purchase of some key agricultural inputs, including hybrid seed and plant-protection chemicals.”
Imported hybrid seed has been a key factor in the expansion of Ukraine’s corn output in recent years.
About 95 percent of Ukraine’s wheat is winter wheat, planted in the autumn and harvested the following summer. Corn is seeded in the spring, typically from late April through early June.
Spring sowing is already under way in Crimea but because poultry production is its largest industry, USDA said, “Crimea is arguably more important as a producer of meat than of grains.”
Ukraine’s agriculture minister this week said most of the spring grain area in Crimea is unlikely to be sown this year due to a lack of fuel caused by the political turmoil.