Thursday, 19 January 2017

Belarus to maintain exports to Russia at current levels

Belarus plans to keep the amount of food produce it exports to Russia in 2017 at the same levels as last year according to BelTA, the state-owned national news agency of the landlocked Republic.

The head of foreign economic affairs at the Agriculture and Food Ministry, Alexei Bogdanov, said that Russia will remain a high-priority trade partner and the strategy is to preserve the volume of supplies reached in the previous years while looking to diversify the range of meat and dairy products.

The Ministry representative then, slightly at odds with his previous statement praised Russia’s import substitution policy as the right thing to do noting that Belarus did the same thing a couple of decades ago.

I spent some time in Belarus a couple of decades ago, I recollect import substitution was because the country was stone broke.  (I also recall a late night boozed soaked dinner in what turned out to be a dark, freezing cold abattoir but that's a story for another time). 

In a parting reference to Russia’s spurious suspension of various Belorussian meat and dairy products throughout 2016, Mr Bogdanov said that not a single country had complained about the quality and safety of our products.

In 2016 Belarus exported products to 58 countries including Africa, Singapore, the Philippines, Bulgaria, Serbia, Israel and the US.

Latest USDA weather update for western FSU

Dormant winter wheat remained insulated by a moderate to deep snowpack over much of the region.

Winter crop areas from central Ukraine into central Russia remained covered by 10 to 50cm of snow.

However, a second consecutive week of warmer-than-normal weather (2-4°C above normal) kept southern portions of Russia’s Southern District (Krasnodar Krai) snow free, though mild minimum temperatures (-6 to -1°C) posed no threat to dormant winter wheat.

Latest USDA weather update for Europe

A slow-moving storm brought widespread snow to dormant winter crops in central and eastern Europe, while dry conditions lingered in southwestern growing areas.

In Spain, sunny skies and near-normal temperatures were favourable for vegetative winter wheat and barley.

However, localized but pronounced short-term drought continued to adversely impact crop development in northwestern Spain (Castilla y León), where 60 day precipitation has totalled less than 50% of normal.

In France - where similar dryness has been noted over the past 60 days - 10 to 25mm of rain improved moisture reserves for dormant to semi-dormant winter crops.

Meanwhile, widespread snow (5-25cm, locally more) insulated dormant winter grains and oilseeds from Germany into Poland and the Balkans.

However, snow cover remained shallow and patchy in northern Serbia and western Romania, where additional burnback or freeze damage was possible from temperatures as low as -19°C.

Chilly weather also prevailed across the Mediterranean region; for the second consecutive week, hard freezes in typically warmer Mediterranean coastal areas may have caused some damage to sensitive specialty crops.

Has Ukraine inadvertently engineered a fertiliser shortage?

Here’s an interesting one; Ukraine is currently debating whether to impose or delay the introduction of anti-dumping duties on Russian urea and urea-ammonium nitrate (UAN) until after parliament passes a bill concerning zero nitrogen fertiliser duties for other countries.

Arguably it would make sense for Ukraine to try and protect its domestic fertiliser industry from its neighbour dumping cheap imports by imposing duties and making them less competitive.

However Ukraine’s Ministry of Agricultural recognises that it may be necessary to suspend anti-dumping duties on Russian imports until after the Verkhovna Rada approves the bill to avoid possible negative consequences for agriculture; which I take to mean a shortage of fertiliser for the coming season.

The scenario being that Ukraine impose duties on Russian imports which reduces the supply before freeing up a replacement supply from elsewhere by passing the zero duties for other countries bill.

The anti-dumping duties on imports of urea and UAN from Russia are set to be introduced in February for a period of five years and the zero duties bill was endorsed by the government committee and sent to central executive agencies for approval which I have no idea how long takes to be ratified.

But it seems entirely possible that Ukraine could shoot itself square in the foot by engineering a shortage of fertiliser for the coming season that would impact negatively on the 2017 crop yield.

Worth keeping a close eye on this story.

Wednesday, 18 January 2017

Russia sign preferential lending agreement for farmers

The Russian Ministry of Agriculture and the state agricultural bank, Rosselkhozbank, have signed an agreement on the implementation of preferential crediting for agricultural enterprises.

The Minister of Agriculture said "The introduction of a new mechanism for concessional lending at the rate of 5% will facilitate the access of farmers to loans."

He goes on to say that farmers will no longer have to wait for subsidies and divert working capital to pay interest on the loan, except they will, albeit at 5%.

The new agreement will allow banks to provide loans to farmers at a rate of not more than 5% per annum and will simplify the process of obtaining government support for farmers.

The bank is owned 100% by the government so this is essentially a farm subsidy or given that the government will earn a revenue from the loans, a tax.

Having said that, obtaining finance in Russia can cost 20-30% so a 5% preferential rate could be a good thing for Russian farmers.

Depending on the terms.

Russia plans to build seed potato production

Russia’s Minister of Agriculture, Alexander Tkachev, reckons it will take five to seven years to develop domestic seed potato production sufficiently to be able to replace imported seed stock.

Speaking at a meeting on Monday about the development of potato breeding the Minister said imported potato seeds currently supply around 80% of the demand.

"We need to thoroughly understand what seeds work with our farmers, what potential is available for domestic selection and how we should build our work with research institutions to five to seven years, [so] Russian farmers could use mostly domestic potato seeds" said the Minister.

Russian seed potatoes resources currently include 409 varieties of which 209 are from Russian breeding and 200 of foreign selection.

According to the Ministry of Agriculture's analytical centre, Dzhambulat House, most of the domestic potato varieties are not used by agricultural producers due to their low competitiveness and most successful domestic breeding varieties do not reach the farmers due to a lack of mechanisms to promote them.

The Minister also acknowledged that while the demand for ware potatoes is almost entirely supplied by domestic production, early spring potatoes are imported from other countries.

About 80% of the Russian potato crop, which reached 3mmt in 2016, is grown on small farms.

Ukraine: 60% of winter wheat varieties are strong

In Ukraine there are currently 320 varieties of winter wheat included in the State Register of plant varieties with 204 identified as strong and suitable for commercial use.

To put that into context the UK has about forty wheat varieties on its current recommended list.

According to the Director of the Plant Production Institute of Ukraine, the number of wheat varieties approved for cultivation has increased 10 times compared with 1990 which is said like it's a good thing.

The Director goes on to say that the average yield of wheat grew from 3.3mt/ha to 8.4mt/ha which I presume he means the potential under trial conditions because he does acknowledge that commercial grain productivity is realized not by more than half which is bit of an understatement.

Despite the best efforts of Ukraine’s seed breeding institute’s wheat yields are, in real terms, no better than when Rick Astley was all over the radio singing Never Gonna Give You Up.

Tuesday, 17 January 2017

Some Ukraine crops now at risk of winter damage

After reporting the Ukraine Ministry of Agriculture’s announcement only yesterday, that prevailing weather conditions and adequate snow cover does not pose a threat to winter crops, I get sent this picture from Mykolaiv region of southern Ukraine taken this morning.

Just goes to show the importance of real time reporting and how you can’t beat a boots on the ground perspective.

Looking at the latest satellite pictures and the thaw seems to have occurred over most of Odessa and half of Mykolaiv oblasts, a combined area of around 4.5mha.

There’s no snow forecast for the next ten days and with night time lows of -12C (10F) predicted we just might start to see some crop damage, in the least those crops are now at an elevated level of risk.

One thing that is for certain, we’ll be sure to include Mykolaiv and Odessa in our crop condition assessments come March.

Monday, 16 January 2017

Russia has restored the status of FMD-free country

Russia was restored its status as a country free from foot and mouth disease (FMD) without vaccination, except in the Vladimir region.

The Director General of the World Organisation for Animal Health (OIE), Monique Eloi, informed Russia’s veterinary and phytosanitary service, Rosselkhoznadzor, by letter last week.

In the letter she said they had studied the report from the Russian side to contain FMD in Vladimir region and concluded that they comply with the Veterinary-Sanitary Code relating to the establishment of a disease containment zone in the country.

Russia had requested the evaluation of the establishment of a containment zone following an outbreak on 20 October 2016.

The containment zone is the Vladimirskaya Oblast and will be effective immediately.

Ukraine's grain harvest reached a record 66 million tonnes

According to preliminary statistics released by Ukraine’s Ministry of Agriculture today, the production of grain and leguminous crops in 2016 was 66mmt.

This is a record harvest in the history of Ukraine and 5.9mmt more than in 2015.

Overall, the total average yield was 4.61mt/ha and consisted of the following.
  • wheat 26.0mmt with a yield of 4.21mt/ha;
  • corn almost (their reporting not mine) 28mmt with a yield of 6.60mt/ha;
  • barley 9.4mmt with a yield of 3.30mt/ha;
  • sunflower 13.6mmt with a yield of 2.24mt/ha;
  • soybean 4.3mmt with a yield of 2.31mt/ha;
  • sugar beet 13.9mmt with a yield of 48.2mt/ha;
  • potatoes 20.9mmt with a yield of 16.0mt/ha.
Some good results there but still room for improvement.

Ukraine winter crops in good condition

Prevailing weather conditions in Ukraine does not pose a threat to the state of the winter crops according to the Ministry of Agriculture.

They report that adequate snow cover in most areas provides sufficient protection despite low temperatures at the end of the first part of January.

They then go on to say that of the 7.2mha planted and 6.8mha emerged, 5.6mha or 83% are in good and satisfactory condition with 1.2mha or 17% in poor condition.

Which is only slightly misleading as what they should be saying is of the 7.2mha of winter crop planted, 77% is in good condition, 17% is in poor condition and 6% failed to establish.

To be honest these mid-winter crop condition announcements are all but meaningless as the crop is sitting under a blanket of snow and no one can tell what’s going on until the spring thaw when we can get out and carryout proper crop condition surveys.

Although according Ukraine’s weather service large amounts of snow will provided sufficient moisture to aid a possible good harvest but at the same time they are suggesting more very cold weather is yet to come.

Friday, 13 January 2017

Latest World Agricultural Supply and Demand Estimates

If I was a farmer chasing markets and I used WASDE numbers as a guide I’d be tempted to drop my wheat area for 2016/17 which is too late for the winter crop but not spring plantings, increase corn and spring barley, drop sunflowers and up soya.

An alternative strategy is to assume that's what everyone else will do and therefore do the exact opposite.

Probably best not to go chasing markets.

Develop your strategy, form a plan, execute in a timely and accurate manner and hope it works sufficiently well to keep farming through to next year.

Anyway, here are some highlights from the report;
  • U.S. 2016/17 wheat ending stocks are up and projected to reach the highest level since the late 1980’s while this seasons winter wheat plantings have dropped 1.51mha year on year to 13.11mha, the lowest since 1909.
  • Global wheat supplies for 2016/17 are raised 1.3mmt on a production increase that is partially offset by lower beginning stocks.  The largest increases are for Argentina, Russia, and the EU. 
  • Global exports are raised 1.2mmt led by increases for Argentina, Australia, and the EU, partly offsetting is a reduction in Canadian exports so far this year.
  • Global use for 2016/17 is raised 0.1mmt with increased food use partially offset by a reduction in feed and residual use. 
  • With total global supplies increasing faster than use, ending stocks are increased 1.2mmt to a new record of 253.3mmt
  • US 2016/17 corn outlook is lower production, reduced feed and residual use, increased corn used to produce ethanol, and smaller stocks. 
  • Global corn supplies are down 1.27mmt driven by falling US stocks.
  • Global coarse grain production for 2016/17 is forecast 1.7mmt lower.
  • Russia barley production is lowered based on the latest government statistics. 
  • Argentina barley production is lowered on dryness during crop heading and grain fill in November and December.
  • U.S. oilseed production for 2016/17 is estimated down 1.5mmt from last month.
  • The 2016/17 global oilseeds supply and demand estimates include higher production and exports compared to last month. 
  • Oilseed production is projected up 0.1 million tons to 554.8 million on increases for cottonseed, rapeseed, and sunflowerseed partly offset by reductions for soybeans and peanuts. 
  • Soybean production is lowered 0.2 million tons as increases for Brazil and China are offset by declines in Bolivia, Uruguay, and the United States. 
  • The largest change to production is a 2.0-million-ton increase to 104.0 million for Brazil, where beneficial rain has resulted in improved yield prospects. 
  • Global oilseed trade is projected at 160.3 million tons, up 0.4 million from last month. 
  • Global oilseed stocks are projected at 93.7 million tons, down 0.9 million, mainly on lower soybean stocks for the United States.

Thursday, 12 January 2017

Ukraine record sugar export

Ukraine’s sugar exports reached 466kmt in 2016, a record quantity since the country became independent in 1991.

The Ministry of Agriculture report that as of yesterday all refineries have completed the production season.

Ukraine’s production season started on August 20 and employed 42 sugar factories.

In total Ukraine produced 2.0mmt of sugar in 2016 from 13.6mmt of sugar beet, which is 40.5% more than the previous year.

Kyrgyzstani produce banned from Kazakhstan

Can’t quite get to the bottom of this story but Kyrgyzstan is no longer allowed to transport goods to Russia by road through the territory of Kazakhstan.

The ban, which came into effect on 1st January, seems to have been issued by the Kazakhstan Ministry of Agriculture but it’s not clear why other than it’s a ban on road and air transport of goods subject to veterinary control through Kazakhstan but they can carry out transport of goods by rail.

It would appear, on the face of it, to be politically motivated rather than genuine phytosanitary or biosecurity reasons, otherwise why would you have a ban on air transportation and not rail?

Wednesday, 11 January 2017

Ukraine to purchase new grain cars in 2017

Ukraine’s Minister of Agriculture along with heads from the State Property Fund and the First Deputy Prime Minister (who is also the Minister of Economic Development and Trade) held a workshop on Ukrainian-Chinese investment projects.

Participants discussed the purchase of much needed grain cars to aid internal transportation of grain to ports for export.

The meeting reported the positive agreement to allocate funds in 2017 to purchase 500 grain cars with a further 1,000 in 2018 and 1,500 in 2019.

The head of the Ukrainian Grain Association had previously reported that Ukraine needs a minimum of 5,000 new grain cars a year and the head of the state railway network operator, Ukrzaliznytsya, said about two-thirds of their 11,650 grain wagons are already operating way beyond their intended lifespan.

What wasn't clear from the meeting was if the positive agreement to allocate funds would actually translate into the actual purchase of rolling stock.