Friday, 21 October 2016

Questions starting to be asked about Russian wheat quality

More reports in the media this week that are starting to question the quality of the bumper Russian wheat crop now sitting in the shed.

The USDA Russian grain report mentioned industry analysts consider the overall quality of wheat is worse this year than last.

SGS did a lengthy piece on how hydrothermal (weather?) conditions during vegetation basically did for protein and gluten.

The US strategic forecasting company, Stratfor, confidently report that much of the Russian wheat yield is of substandard quality while in the same article admit that information on the quality of the Russian harvest is not readily available.

These are just three from half a dozen or so news reports that floated across my desk this week which highlighted quality and the drop in milling grade compared to previous years.

Interestingly for all the weather related reasons given in these reports not one mentions the extensive lodging that we saw as a result of the excessive stem elongation as crops grew unabated by a shortage of water.  And by extensive I mean we saw lodging everywhere, Stavropol; Krasnodar; Rostov; Voronezh; Lipetsk; Tambov right up all the way to Moscow. 

As lodging would do more for reducing quality than rain per se then it makes you wonder if the reports fail to mention it, did any of the authors get out of the city to go and have a look?

And no one mentions that it was an avoidable issue.

Some plant growth regulators at early stem extension along with ramping up fungicides then you’d have been, if not off scott-free, certainly in a better position quality wise.

With a $30/mt premium milling commands over feed, which is only likely to get bigger given the amount of feed that will be on the market this year, it makes an additional spray cost of $20/ha seem like a good investment now.

Hindsight is twenty twenty vision but given how wet it was in April and into May some of us did see this coming and suggested something was done about it at the time but it fell on deaf ears.

You can take a horse to water etc.

Russia’s 2016/17 grain crop the largest post USSR

The USDA Moscow office has just released their latest summary report on Russia's 2016/17 grain production.

In it they forecasts Russia’s total grain production for 2016/17 to be 114.6mmt which will be the largest post USSR crop.

Their forecast is made up of wheat at 72.0mmt, which will be the largest wheat crop in Russian history, barley at 18.0mmt, corn 13.0mmt and the balance of 11.6mmt made up from other grain crops and pulses.

Total grain exports are forecast at 38mmt, including 29.0mmt of wheat, 4.0mmt of barley, 4.0mmt of corn and 1.0mmt of other grains and pulses.

The Russian Ministry of Agriculture October forecast puts the 2016/2017 crop at 115 to 116mmt and state that given this high amount of crop the “comfortable” volume of grain exports will be 40mmt.

As of October 12, 2016 the wheat harvest stood at 26.8mha (98%) and reached 74.7mmt which is 20% and 8% more than on the same date last year, respectively.

There is no comprehensive data on the quality of the wheat crop, but industry analysts consider that overall the quality of wheat is worse than last year, especially in the Central region where, due to heavy rains in July and August, the wheat crop lost protein.

However, they go on to say, given the overall size of the wheat crop, the quantity of good quality milling grain will not be less than last year.

Barley harvest stands at 18.5mmt (16.5mmt on the same date last year) from 7.9mha (97%).

Corn stands at 5.6mmt from 1.04mha (36%) which compares to 6.9mmt and 1.4mha on the same date last year.

The corn harvest this year is running late and what the weather does over the next few weeks will be crucial in determining how much of the outstanding crop is gathered in before conditions stop play, until the spring that is.

Industry analysts maintain that corn can be harvested for a much longer period than other grains which is true but up to a point.

Thursday, 20 October 2016

Ukraine sugar beet harvest facing an increasing challenge

To date Ukrainian farmers have harvested 119,000 ha of sugar beet, or 41% of the area sown according to the Ministry of Agriculture.

That means there could be another 170,000ha left to lift over the next six weeks which, considering they are over half way through the harvest window, could be a challenge.

It’s been wet in Ukraine recently and
farmers have been struggling to lift beet from soaking wet soils so how much of that 170,000ha gets lifted before frosts put an end to it remains to be seen.

Current yields are reported at 45.8mt/ha compared to last years crop of 42.8mt/ha.

Cereal mycotoxin levels up

Here’s an interesting story in this weeks All About Feed publication.

The Belgium feed industry, who systematically monitor raw materials for the presence of mycotoxins, found that out of 498 post-harvest grain samples tested, 64% contained at least one mycotoxin above the limit of detection.

In the 2015 the result was 34% and in 2014 this was 48%.

The Belgian Compound Feed Industry Association who conducted the survey say the increase in contamination level in this year’s harvest is the result of less favourable growth circumstances by which I think they mean it was wet.

Bearing in mind Belgium farmers achieve some top wheat yields and don’t hold back on fungicides, perhaps it indicates a quality issue currently sitting in bunkers across Europe and beyond.

I know for a fact Ukraine and Russian wheat receives next to no fungicides by comparison and it’s been a wet growing season there.

Also worth keeping in mind this survey only tested post-harvest contamination levels and mycotoxin contamination can increase during storage.

USDA annual report for Ukraine’s dairy sector

The latest USDA annual report for Ukraine’s dairy sector makes interesting reading, particularly if you’re milking cows in Western Europe.  Here’s some highlights.

Fluid milk production in Ukraine is expected to continue to decrease in 2016-17 because of a lack of foreign markets for Ukrainian dairy products, low world market prices and increased competition in the region although fluid milk production may start to stabilise in 2017 as no new market shocks are expected.

A decrease in cow number will continue a two-decade trend although accompanied by increased productivity.

Being relatively low-efficient producers, rural households use a low-cost production model with a lot of seasonal grazing and minimum usage of expensive feeds or veterinary medicine.

The quality of milk from household’s remains quite low however Ukrainian dairy processors cannot avoid using household milk due to insufficient quality (the report says quality but I guess they mean quantity) of industrially produced milk. 

In 2015, 32% of milk sold for processing came from households.

Exports of almost all processed dairy products to Russia, which was a major market for Ukraine, stopped in 2014 and is not expected to recommence anytime soon.

EU has partially opened its dairy market for Ukrainian dairy products under the Deep and
Comprehensive Free Trade Agreement.

The European Commission has cleared 14 Ukrainian milk and dairy companies as authorised exporters to the EU.

Ukrainian companies have only conducted test shipments to the EU, market development will take some time as traditional Ukrainian products are very different from those demanded by EU consumers.

Ukraine will continue to export dried dairy products and butter to utilize excess milk supply.

Industry’s efficiency will be improving due to increased investments in industrial milk production. 

Wednesday, 19 October 2016

Ukraine has harvested 48mmt of grain

Ukraine's harvest currently stands at 48.7mmt of grains from 11.7mha, or 82% of the plan, with an average yield of 4.1mt/ha.

This includes 9.8mmt of corn from 1.7mh (41%) with an average yield of 5.6mt/ha.

Sunflower stands at 10.5mmt from 4.8mha (81%) with an average yield of 2.1mt/ha and soya at 2.9mmt from 1.3mha (73%) with an average yield of 2.1mt/ha.

As of October 18, winter grains plantings stand at 5.4mha (74%), down 322kha on last year which includes 4.8mha (79%) of winter wheat and triticale and 386kha (38%) of winter barley.

Winter oilseed rape plantings are up slightly at 769kha (106%).

Russia has harvested 116mmt of grain

The Russian Ministry of Agriculture report the country has harvested more than 116mmt of grain.

As of October 18, 2016 the country has harvested 116.3mmt of grain, 13% more than the same period last year (103.1mmt in 2015) and at an average yield of 2.4mt/ha (2.4mt/ha in 2015).

Grains have been harvested from ​​44.1mha or 93.4% of the cultivated area (42.8mha in 2015) which suggests Russia’s current increase in grain output is coming from an increase in planted hectares rather than any significant uplift in yield.

Planting of winter crops for next harvest stands at 15.7mha, or 90.2% of the area target (15.1mha in 2015).

Russia has harvested 11mmt of oilseeds

The Russian Ministry of Agriculture report the country has harvested 11mmt of oilseeds so far.

This includes;
  • 7.3mmt of sunflowers (8.1mmt in 2015) with an average yield of 1.6mt/ha (1.5mt/ha in 2015);
  • 2.1mmt of soya (1.7mmt in 2015) with an average yield of 1.6mt/ha (1.5mt/ha in 2015).
  • 1.0mmt of oilseed rape (1.0mmt in 2015) with an average yield of 1.2mt/ha (1.2mt/ha in 2015).
According to a Ministry forecast the oilseed harvest is expected to reach 14.9mmt, up on last years 13.8mmt crop.

Latest USDA weather update for western FSU

Additional heavy rain in the west contrasted with dry weather in eastern wheat areas.

A slow-moving storm system produced moderate to heavy rainfall (10-90mm) over the western half of the region, alleviating short-term drought over central and western Ukraine but saturating or flooding low-lying fields.

Showers from this system (10-40mm) also spread into southern Russia, maintaining good to excellent conditions for winter wheat establishment.

Meanwhile, sunny skies promoted winter wheat development across west-central Russia.

The season’s first freeze (-7 to -1°C) was reported from Belarus and northern Ukraine into central Russia, while readings remained above freezing in primary winter wheat areas located across the south.

(This week we received reliable reports from southern Ukraine of 300m over the previous two weeks so 10-90mm might be conservative.)

Tuesday, 18 October 2016

Latest Black Sea crop update now available

The latest Black Sea Crop Update is now available to purchase, priced at $250.

In it we have summarised information collected during this seasons Russian and Ukraine crop tours which covered a combined distance of 8,625km and carried out over one thousand individual crop assessments to quantify the condition and yield estimates for corn, sunflower and soya.

The report contains information on the routes taken, oblasts covered, methodology, results of crop condition scores, yield estimates for corn, sunflower and soya and a brief discussion on the findings.

You may also be interested to hear that we are currently planning the next Crop Tour of Russia and Ukraine in November to look at the condition of wheat as it heads in to the winter.

Email me at if you would like to receive a copy of this report, sign up for the November results or would like to discuss subscriptions for next season.

Highlights from the latest USDA report for Ukraine

The latest USDA GAIN report for Ukraine has been released, here’s a few of the highlights.

All grains demonstrate higher yields as the result of favourable weather conditions.

Wheat output for 2016 is 26.6mmt, down only 2.5% on last year despite a drop in winter crop hectares.  

According to industry sources, 60% is milling grade and 40% is feed (I don’t buy that).

Barley production is 9.7mmt, up 13% on last year.

Corn harvest is in progress but expected to be up 10% on last year at 26mmt based on expanded production areas.

Wheat food consumption as well as feed consumption for all grains has been downscaled based on shrinking animal numbers, the difficult economic situation, and change in consumer preferences.

Decreased domestic consumption and lower ending stocks for grains allowed for higher exports.

Farmers are currently planting winter grains and as of October 4 had sown 3.6mha wheat, 119kha of rye and 181kha of barley 2016.

These numbers are 3-8% lower compared to the previous year.

Planting decisions made by farmers in regard to winter grains are being impacted by both economic factors (low grain prices) and weather conditions (dry soils at end September, wet soils by mid-October).

Monday, 17 October 2016

Latest Ukraine agri-business news

Ukraine's President Petro Poroshenko has signed a financing agreement with the European Investment Bank (EIB) on issuing EUR400 million of loans for agriculture projects, specifically grains and oilseeds, fisheries and aquaculture.

The EIB loans can account for up to 50% with the other part coming from banks participating in the lending program which might be a problem as Ukraine banks are not all that keen on lending money particularly to smallholders.

USAID has agreed a new technical assistance project worth more than USD20 million to support small-scale farming in Ukraine.  The new four-year project is aimed at increasing the competitiveness of Ukraine's small and medium-sized farms by supporting reforms in the agricultural sector aimed at improving the business environment and attracting investment.

Not entirely sure what that all means but they do go on to say that, as a part of the initiative, Ukrainian vegetable, fruit, milk and meat producers will receive technical assistance on international standards of quality and safety and entering export markets.

The European Commission has adopted a proposal to give Ukrainian producers access to the EU market for a range of agricultural products by temporarily raising tariff quotas for three years.  This is on top of the preferential tariff-rate quotas already in place.

Ukraine’s Ministry of Agricultural estimate an additional EUR200 million of agricultural products could be shipped to the EU markets as a result and I see no reason why preferential treatment by the EU towards Ukraine will not continue as the EU looks to support Ukraine economically and politically.

Given that the EU account for 80% of UK wheat exports and 63% of barley exports this potentially leaves UK farmers in a very tenuous position depending on how hard Brexit negotiations turn.

Latest Russian agri-business news

Russian Ministry of Agriculture report that from January to October 2016 farmers purchased 13% more mineral fertilizers compared to the same period last year, driven in part by an increase in hectares planted but also a 2-3% drop in fertiliser prices.

The total amount of credit supplied to Russian farmers for seasonal fieldwork is up to 261 billion roubles, which is 28.7% more than the same period last year.  This includes Rosselkhozbank who issued 190.38 billion roubles in loans (+34.5%) and Sberbank who allocated 70.62 billion rubles (+15.5%).

Total Russian grain exports for market year 2016-17 is forecast at 37mmt including an increase in wheat export to 28mmt from 24mmt.

Last week Egypt bought 60kmt of Russian wheat and secured another 120kmt from Romania, no mention of ergot at this point but given the wet season that might only be a matter of time.

Syria's state grain buying agency has agreed to buy 1mmt of Russian wheat following a poor harvest in the region although there is some question over whether this is part of an aid package as the price is low and would be difficult to fulfill as a commercial trade.

The Russian government finally reduced export duty on wheat to zero but retained an element of uncertainty by saying that it will return in the case of a force-majeure such as the devaluation of the rouble or low wheat yields.

Russian import substitution is turning into exports according to Pravda who report that the country will produce a 1mmt surplus of sugar in 2016 which, for the first time ever, could be exported assuming they can get it all out of rain sodden fields.

Friday, 14 October 2016

Ukraine harvest update

Ukraine Ministry of Agrarian Policy report the current harvest stands at 46.6mmt, down slightly on the same period last year (47.2mmt in 2015).

To date 11.4mha or 80% of the cropping area has been cut but wet and windy weather this week has slowed or stopped harvest with reports of damaged and lodged crops in the south which will undoubtedly lower final harvest output.

Winter crop plantings stand at 4.8mh or 66% of the reported target area, down 383kah on the same date last year.

Some of my contacts are suggesting they will stop planting anymore winter wheat as a result of the wet weather so it will be interesting to see how close to the target planting Ukraine gets to this year.

Russian harvest update

Russian Ministry of Agriculture report the country has collected 115mmt of grain, 13% more than the same period last year (102mmt in 2015).

Yield is up at 2.6mt/ha compared to 2.4mt/ha last year which reflects the good growing season experienced this year.

As of October 13, 2016 in the country had combined 43.8mha, up 1.3mha on the same point last year.

Consequently while some of this additional yield is coming from an increase in the tons per hectare gathered, the bulk is coming from more hectares cut.

Winter crop plantings currently stand at 15.1mha or 86.9% of the reported target area (14.8mha in 2015).