Wet wet wet

Its been raining and the ground is soaking wet.

Oilseed rape planted in to dry conditions earlier this month will appreciate the drink but the cold weather (I wore a hat today) will mean the plants can not really take full advantage.

Winter wheat plantings in Ukraine and Russia are now behind schedule so much so that commentators are writing about a shortage of wheat for 2014.

My contacts are all a little less negative; it is wet and machines are not moving at present but given a dry'ish October then they should catch up.

The more immediate impact of the rain is those business relying on dry conditions to cut sunflowers and soya will incur additional drying costs and more significantly, delays in harvesting corn as they wait for driers to clear the backlog.

Ukraine is about to sign an association agreement with the EU which essentially is a step towards Europe.

Putin is furious and the rhetoric is becoming increasingly aggressive, Russia will likely retaliate the only way it knows how by increasing gas prices.

Crop prices have dropped 40% in the last month.

Corn which was fairly stable all year has dropped from around €170/mt to €100/mt; prices haven't been this low since 2009-10 season and there is a feeling it may go lower still.

Wet crop, high gas prices, low crop prices, record areas of crop, high volumes, no additional drying infrastructure.

It's all starting to look like a bit like a perfect storm.

China in your hand

This week China announced they had had reached an agreement with Ukraine to buy 3 million hectares of prime farmland in Dnipropetrovsk.

After much discussion as to what a hectare is the press went to town trying to contextualize 3 million.

Apparently it's about the size of Belgium, Armenia or Massachusetts and is 11,583 square miles or 9% of Ukraine's arable farm land.

I haven't checked any of these comparisons because I couldn't be bothered so don't email me if they are wrong.

However this was quickly followed up with a Refutation of Information statement from Ukraine saying it had all been a big misunderstanding and what they had actually agreed to was an investigation to cooperate in a 3 thousand hectare drip irrigation project.  

3 thousand hectares is about 11.5 square miles or the size of Slough.

Despite back tracking the intention still holds true that many country's, China included, recognise Ukraine as an important provider of food security so expect more of these announcements in the future and expect some of them to eventually stick.

It also holds true that Ukraine is one bastard of a place to do business.