Good harvest in Black Sea region will help offset EU drought

KIEV, Ukraine – Black Sea exporters Ukraine, Russia and Kazakhstan forecast better crops this year, helping to fill in shortages caused by drought in western Europe.

Ukraine expects to harvest more than 45 million tonnes of grain, up from the drought-reduced 39.2 million tonne crop last year, first deputy agriculture minister Mykola Bezugly said May 19.

“Moisture accumulation is satisfactory … which allows us to talk about getting a good grain harvest this year,” Bezugly told a news conference.

Tetyana Adamenko, who heads the agricultural department of Ukraine’s state weather centre, said spring crops needed more rain to improve, while most winter crops were in good and satisfactory condition.

On May 19, Ukraine’s parliament passed legislation creating a new grain export regime with duties replacing the quotas imposed in the wake of last year’s drought.

The quotas limited the country’s exports to about nine million tonnes in the first 10 months of the marketing year, down from 19 million in the same period in 2009-10.

Russia’s government forecasts it will produce 85 to 90 million tonnes of grain this year, up 50 percent from the drought-hit 61 million tonnes last year, but still down from 97 million tonnes of grain in 2009.

The Russian Grain Union, a major industry lobby representing exporters and producers, forecasts the crop at 82 to 86 million tonnes this year.

Russia’s embargo on grain exports is due to expire on July 1, but traders think Moscow will likely play it safe and wait until the end of September for a full lifting.

“Keeping in mind the lessons of the previous season the government will try to buy some time and wait until some preliminary crop reports,” an international trader specializing in the Black Sea region said.

A parliamentary election in December and a presidential one in March 2012 would also play a role. The government may want to avoid measures that would boost food prices but at the same time gain the votes of farmers who saw their revenues plunge because of the drought and the export ban.

Kazakhstan expects grain exports next season to match or exceed the six million tonne forecast for the current marketing year, with Iran and Arab states emerging as growing markets, the country’s agriculture minister said.

Soil conditions point to an improvement on last year’s drought-ravaged crop in the vast central Asian state, which is aiming to diversify its farm sector by attracting investors in a range of food projects, said Asylzhan Mamytbekov.

“Kazakhstan is not only grain and meat. There is a wide spectrum of projects for investors,” Mamytbekov said in his first interview since being appointed minister last month.

Kazakhstan, the world’s seventh-largest wheat exporter last season, plays a key role in regional food security. It consumes around 2.5 million tonnes of grain annually while producing, on average, upward of 15 million tonnes a year.

Russia’s grain export ban allowed Kazakhstan to grab a share of regional markets this year, Mamytbekov said, while some central Russian regions hadtaken the unusual step of buying feed grain from Kazakhstan.

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