Conditions in EU good, China improving | Analyst doubts Crimean conflict will disrupt exports
Winter wheat crops are shaping up nicely around the world despite dryness in the United States and the threat of war in Ukraine, says an industry analyst.
“Globally it looks like the winter wheat crop is going to be most likely larger than last year,” said Bruce Burnett, CWB weather and crop specialist.
The U.S. Department of Agriculture recently released a report on Ukraine’s planting prospects.
Growers seeded 15.56 million acres of winter wheat, down about five percent from last season.
Ukraine typically produces 20 million tonnes of wheat, 40 percent of which is exported.
Fall planting was delayed in the Black Sea region because of extreme dryness followed by excessive moisture at seeding time. That caused some acreage reduction.
The region has experienced a mild fall and winter since then, which should result in lower winterkill losses than usual.
Burnett said crop development in Russia and Ukraine is likely ahead of normal because of an unseasonably warm October and November.
There has been market speculation that spring planting in Ukraine will be disrupted by the threat of war.
Spring wheat accounts for less than five percent of Ukraine’s total wheat production, and Burnett doubts farmers will walk away from their fields, regardless of the risk of war.
“What farmers do is they plant crops and grow them. That’s how they make money,” he said.
As a result, Burnett doesn’t anticipate any reduction in Ukraine’s wheat exports in 2014-15.
“I don’t foresee that happening unless the situation escalated far above where it is at the present moment,” he said.
However, Ukrainian wheat has become more expensive in recent weeks because of an increase in the risk premium for loading vessels at the country’s ports.
Burnett estimates shippers are paying $3 to $5 per tonne more than they were before the Crimean conflict.
“If missiles fly, ship owners don’t want their vessels there,” he said.
Wheat markets are more concerned about the condition of the U.S. winter what crop than they are about what’s happening in Ukraine.
“The winter cereal crop in Oklahoma, Kansas and Texas needs some rain promptly in order to maintain the yield potential there,” said Burnett.
Conditions are better than they were last year at this time, but portions of Oklahoma and Texas are experiencing “extreme” or “exceptional” drought.
“Is the crop going to be as small as last year? I doubt it, right at this juncture at least anyway, but the market is definitely concerned about it,” said Burnett.
The next biggest threat to the world wheat crop is the developing El Nino, which could lead to a dry growing season in Australia.
However, that crop hasn’t even been planted yet.
Winter wheat is in good shape in the European Union, which is the world’s biggest wheat producer.
Conditions are improving in China, which is the second biggest producer. The winter wheat crop in that country got off to a rough start because of dry early-winter conditions, but February rain has stabilized the situation, said Burnett.
He believes the world’s winter wheat crop is off to a good start and should be bigger than last year’s harvest.
However, the tale will be told over the next two to three months, de-pending on how much rainfall the global crop receives when it comes out of dormancy.