Happy New Year

Wishing everybody a happy and prosperous new year and a big thank you for following and supporting our endeavors over the previous year.

We have some great ideas and plans for our Black Sea crop tour service for 2017 building on the hard won experience we have gained over the last two years so watch this space.

Latest USDA weather update for western FSU

Dormant winter wheat remained sufficiently protected from bitter cold by snow cover.

Primary winter crop areas from central Ukraine into southern and central Russia remained covered by 5 to 20 cm of snow.

As a result, there was little concern from this week’s cold; temperatures reached as low as -18°C in northeastern Ukraine, and plunged to -28°C in northern portions of Russia’s Southern District.

Ukraine held Parliamentary hearings on land reforms

On Wednesday this week Ukraine held parliamentary hearings devoted to finding the best model for agricultural land regulation.

The discussion was attended by over 600 people including farmer representatives, professional associations, scientists, experts, executive authorities and local governments.

The First Deputy Minister of Agrarian Policy noted that while restrictions on land sales was a necessary precautions, the prolonged moratorium had resulted in very large agricultural groups with a prevalence to produce simple crop production cycles such as corn and sunflower.

He pointed out that the only source of income for land owners who are not willing or able to farm the land is to rent it at unreasonably low rates and that all actions and decisions in the context of land reform should be considered in the light of rural development.

Therein lies the issue; economic viability, sustainable land use and the social implications of not keeping people on the land.

If you study the EU Common Agricultural Policy you will see the same story played out over the last fifty odd years, while many people associate the CAP as an economic policy, it is in fact a social policy.

The EU could probably farm and produce food much more efficiently than it currently does but what would all those people do? 

It’s the same if not more so in Ukraine; without farming there is literally no other employment options available in rural areas.

The Deputy Minister went on to say that “in rural areas, it must be the middle class which will be the driver of economic activity and job creation. Tools to achieve this goal may be different, but it is clear that the transformation is not possible without changing the size of land relations."

Given the high capex required to go farming, even on a small scale, then finance at preferential rates must be one of those tools which is why so far in Ukraine’s redeveloping economy, farms are predominantly large and financed from private sources.

It doesn’t sound like anything will be decided soon but it’s definitely worth keeping a close eye on Ukraine's land reforms.

The moratorium (ban) on the sale of agricultural land was introduced in 2001 and has been extended every year since with the next review due in 2018.

Ukraine: every fifth hryvnia GDP produced in the agricultural sector

According to the State Statistics Service of Ukraine, agriculture, forestry and fisheries contribution to GDP for the first nine months of 2016 amounted to USD127 billion.

Given that the total GDP was USD664 billion, the agricultural sector, excluding processing, totalled 19%.

Ukraine signs a Memorandum to prevent speculation with food prices

Yesterday Ukraine’s Minister of Agriculture, Taras Kutoviy, along with the head of the Antimonopoly Committee and head of State Service on food safety and consumer protection signed a Memorandum of Cooperation, which among other things, aims to protect consumers from food price hikes.

Ukraine’s slow move towards a free market economy recently included a trial abolition of direct state regulation on prices for basic foodstuffs which simplified business but left consumers exposed to food price increases either by market economics or unfair competition.

The memorandum was signed in response to these concerns and time will tell if they have just swapped one set of archaic legislation for another with no real change.

Initial comments from the Minister are not particularly positive, “we have to solve problems of ​​price controls and unfair competition and ensure quality goods and services at a reasonable price".

Question is, who decides what is a reasonable price?

Ukraine's grain export limits agreed

Ukraine’s Ministry of Agriculture held its monthly grain market working group with representatives from the grain trade to discuss the latest agreement on exports.

Deputy Minister Elena Kovaleva reported preliminary estimates for 2016/2017 marketing year is expected to be a new record for general grain production at 64.2mmt with an export capacity of 40.2mmt.

Members of the working group agreed on the current Memorandum of Understanding and provided information on further exports, primarily corn.

The Deputy Minister said that "we are ready to consider revision in exports of grain and corn upwards” and proposed returning to this issue in January and February when revised corn crop data would be available.

Considering the Ministry reported the corn harvest was 77% finished over a month ago it now seems odd they need to wait until January or February to get a proper handle on how much corn is available for export.

As of December 2016, exports of wheat in the current marketing year are estimated at 11.0mmt which is 66.5% of the 16.5mmt recorded in the MoU, barley at 4.2mmt or 74.8% from 5.6mmt and corn at 5.8mmt or 33.7% from 17.2mmt.

The Memorandum of Understanding between the Ministry of Agricultural and market participants is a voluntary agreement to set the amount of grain available for export to guarantee food security in Ukraine. 

Russia to reclaim idle land to boost production

Russia continues to push agriculture as part of its broader economic policy, this time by returning idle land back in to production.

Earlier this week the Deputy Minister of Agriculture said that “the task is to return to operation of agricultural land, as well as involvement in the turnover of new agricultural land to obtain high yields”.

He added that effective work in this direction requires the collaboration of Ministry of Agriculture and regional agribusiness administration.

Not entirely sure how regional agribusiness administration will contribute but he will require the active collaboration and investment of regional agribusinesses to carryout operations and pay for seeds, fertiliser, sprays, fuel, machinery and labour in order to realise his vision of returning idle land back in to effective production.

From my experiences there is a reason why this land is not in production.

More often than not it's marginal land which was the first to be abandoned when economics tightened as it was not capable of producing viable yields, so I’m not entirely convinced it should be brought back into production, not growing crops anyway.

Much of this land would suit extensive grazing of cattle particularly the local hardy breeds adapted to scorching summers, freezing winters and low quality grazing and given that in 2015 Russia imported over half a million tonnes of beef that makes more sense than growing crops that might break even in a good year.

The Minister might also want to take a look at the current cultivation and rotation practices particularly in drier eastern regions where land is cultivated and left barren for a season to allow soil moisture reserves to build up.

If he is going to spend money then a few roubles on introducing direct drilling and soil water conservation techniques will likely pay greater dividends than trying to grow wheat on land that is just not up to the task.

Azerbaijan destroyed infected corn imported from Russia

Azerbaijan’s State Phytosanitary Service reported that on 15 December they destroyed ten tonnes of corn imported from Russia because it was infected with a quarantine organism, namely common Ragweed (Ambrosia artemisiifolia).

Sounds like a storm in a tea cup or to use the Russian idiom, делают из мухи слона.

However given the wet season and delayed herbicide applications as a result with the sheer volume of weed growth and that ambrosia grows like, well, a weed, it might just be worth keeping an eye on the content of that admix.

Russian pig production up 13.5%

Russia’s Ministry of Agriculture announced today that during the first 11 months of this year, live weight pig production increased by 13.5% compared to the same period last year and amounted to more than 3.1mmt.

According to the Federal State Statistics Service in November, the average price of agricultural producers of pigs in live weight in Russia was 94.08RUB/KG (1.53USD/KG, 1.25GBP/KG).

Latest USDA weather update for western FSU

From northern and eastern Ukraine into southern Russia, snow provided timely protection from the coldest air of the season.

Snowfall averaged 2 to 15 cm in Ukraine and Belarus, with the deepest snow cover (10 cm or more) noted in eastern Ukraine where readings dipped to -22°C during the period.

In Russia’s Central and Southern Districts, 5 to 20 cm of snow (locally more) afforded adequate protection from temperatures as low as -27°C.

Consequently, this week’s arctic blast had little detrimental impact on dormant winter wheat.

The weeks Black Sea agri-business news roundup

Russia’s Minister of Agriculture  reported to the State Duma that 16/17 grain exports will be about 35mmt and that the country will be self-sufficiency in agricultural products in seven years.

Trade relations between Russia and Turkey appear to be easing with the head of the Russian agriculture watchdog saying that the removal of bans may start from next week with initial plans to drop restrictions on aubergine, vegetable marrow and lettuce. 

Meanwhile relations with Belarus appear to be deteriorating as Russia suspended imports of chicken from five large Belarusian enterprises and banned imports from a number of dairies.  Belarusian Deputy Minister of Agriculture responded by saying they export to 58 countries across the globe and “no one complains about the quality of our products but Russia.”

Keen on encouraging inward investment, Ukraine's Minister of Agriculture met with a French winemaker this week to discuss the recent destruction of his vineyards in Odessa.  This story has been running for some time but basically involves a private viticulture investment being harassed by the local administration.  It's all smoke and mirrors as you would expect but not helped by the Minister saying “I hope the truth will be found”.  

“Hope” is not a word investors like to hear.

Ukraine has exported 12 billion USD of agricultural products so far this year resulting in 8.73 billion USD balance of trade with the biggest share in cereals (4.8 billion USD), fats and oils (3.1 billion USD) and food products (1.8 billion USD).

Ukraine announce they are to strengthen checks on GM crops grown in the country, something they tout every now and then but it’s generally acknowledged as the worst kept secret that much of Ukraine’s soya is GM.  It is not illegal to grow GM plants in Ukraine, but no GMOs have official registration needed for legal cultivation, so the logic goes that if you don’t register it then you are not breaking the laws.

This kind of twisted thinking led Ukraine to make it a legal requirement to label bottled water “без ГМО” (without GMO) and does nothing for the countries credibility.

Russia aims to reach self-sufficiency in seven years

Russia’s Minister of Agriculture, Alexander Tkachev, gave an update during Government hour to the state Duma on Wednesday.

He basically reiterated the current agricultural policy of import substitution saying Russia will be able to reach full self-sufficiency in agricultural products, except for exotic foods, in seven years.

From my travels across rural Russia, many people are already self sufficient in agricultural products.

Tkachev went on to say that this year’s grain harvest reached 117mmt, which is a post-Soviet record and grain exports will be about 35mmt during the current agricultural year. 

He doesn’t mention grain quality, specifically wheat, not that I can find anyway and I can’t help but think it’s an issue that is not going to go away.

He went on to report that he was confident 10-12 million hectares will be brought back into agricultural production which he viewed as a priority.

It would certainly boost Russian agricultural production if they did but bearing in mind Russia has a record grain harvest, there is possibly a reason why that land is currently lying unused.

On meat he reckons exports could reach 1mmt by 2020 and see’s Asian markets as the target but then again who doesn’t.

With Milk production at an all-time low (here) the Minister recognises that to completely replace imported dairy products, Russia will need to develop more than 800 dairy farms, or 160 farms every year by 2020.

Possible investment opportunity there for adventurous dairy farmers with deep, deep pockets.

The ministry also plans to protect domestic producers from unfair competition so expect more stories of import administration irregularities resulting in dangerous and counterfeit Belarussian apples being destroyed.

Ukraine has exported 12 billion USD of agricultural products so far this year

According to the State Statistics Service, Ukraine exported agricultural products worth 11.83 billion USD accounting for 40.7% of national exports.

During the same period Ukraine imported agricultural products worth 3.10 billion USD dollars, accounting for 9.9% of national import.

Thus the balance of trade in agricultural goods was worth 8.73 billion USD.

The biggest share in Ukrainian exports was cereals (4.8 billion USD), animal or vegetable fats and oils (3.1 billion USD) and food products (1.8 billion USD).

Imports are predominantly vegetable products (1 billion USD) and food products (1.4 billion USD).

In 2015 agricultural exports amounted to 14.56 billion USD (38.1% of national exports) and imports 3.47 billion USD (9.3% of national imports) with a balance of trade worth 11.09 billion USD.

Ukraine has exported over 20mmt of grain

As of December 15, in the current marketing year, Ukraine has exported 20,061,000mt of grain, up around 4.5% on the same period last year.

More than half (10.6mmt) of exports was made up wheat, corn accounted for 5.3mmt and barley 4.0mmt.

In addition, Ukraine exported 165,000mt of flour.

The largest importers of Ukrainian grain is Egypt, China, Thailand, Saudi Arabia, Indonesia and Bangladesh.

The Ukraine marketing year for cereals begins July 1 and ends June 30.

Ukraine planted 6.9 million hectares of winter crops

Ukraine Ministry of Agriculture report farmers have planted 6.9mha of winter crops including 5.9mha of wheat and triticale.

They go on to report 6.5mha emerged shoots of which they reckon 5.4mha (83%) are in good and satisfactory condition and 1.1mha (17%) in poor or thinned condition.

This compares to our crop tour assessment in November when we scored wheat as only 75% in good and satisfactory condition and 25% in poor or thinned condition.

Winter canola plantings are 845kha with 782kha emerged, of which 82% are in good and satisfactory condition and 18% in poor or thinned condition.

Latest Russian harvest and planting figures

Russian Ministry of Agriculture report that as of November 12, soya harvest stood at 3.2mmt, up 14% on the same period last year (2.8mmt in 2015).

This year's total soya crop will be a record with an average yield of 1.55mt/ha (1.43mt/ha in 2015).

The total grain harvest stands at 125.5mmt of in bunker weight, 15% more than the same period last year (108.8mmt in 2015).

Breakdown of the harvest is wheat 75.9, barley 19.1mmt, corn 14.9, rice 1.3mmt, sunflower 11.3mmt and canola 1.1mmt.

The potato harvest is 6.9mmt, sugar beet 51.1mmt,and vegetables 4.2mmt. 

Winter crop plantings is 17.4mha or 100.1% of the forecast which compares to 16.3mha in 2015.

Latest USDA weather update for western FSU

Moisture reserves remained favourable for dormant winter crops, though many key southern growing areas remained devoid of a protective snow cover.

Widespread precipitation — rain in the south and snow in the north — maintained adequate to abundant moisture reserves for spring growth.

Temperatures averaged 2 to 6°C below normal in the region’s key winter wheat areas from central and southern Ukraine into southern Russia, though these same areas remained devoid of a protective snow cover.

At week’s end, snow cover (2-20 cm) extended from northern Ukraine and Russia’s Central District east into the Volga District as well as northern portions of the Southern District.

Key winter wheat areas in the southwestern Southern District remained exposed to potential incursions of bitter cold.

This weeks Russian Agri-business news

Russia continue to report bullish agricultural production, this time greenhouse vegetable crops up 33% more when compared to the same date last year.

While Russia’s poultry industry seems to have reached domestic demand saturation as the industry reports growth stopped in Q3 after ten years of a steady 13% increase in output.

So it comes as no surprise to hear that the Russian poultry and meat producer, Cherkizovo, has negotiated and been granted authority to export chicken meat to the EU.

As of 1^st November, Russian grain stocks stood at 47.7mmt, the third month in a row of highest grain stocks (y-o-y) in the last five years.

Russia's record stocks are due in part to a record crop and slower than expected pace of exports with Andrey Sizov from SovEcon telling me via twitter that, in his opinion, the main reason is a dramatic improvement in farmers finances, presumably allowing them to hold on to stocks and sell strategically.

African Swine Fever (ASF) in southern Russia had the grain trade holding its breath this week with reports of possible quarantine measures affecting grain transport and exports.  

The issues seems to have passed for now with Krasnodar Governor Mr Korobkagive saying earlier today that there are no grounds to impose quarantine on grain shipments and that the situation is stable.

Good news for now but given the highly contagious nature of ASF, no treatments or vaccines and high mortality rates, I suspect this won’t be the end of the story.

Louis Dreyfus are to begin operations at the Don River grain terminal in Azov, Rostov region, with a facility that has the capacity to store 50,000mt and can handle ships up to 5,000mt.

Russia continue to keep up pressure to increase agricultural production with the latest draft resolution on idle or inappropriate land use aimed at bringing more agricultural land back into production.

Finally, Russia’s phytosanitary watchdog confiscated five tons of fruits, veg and nuts in November from the hand luggage of arriving passengers. Five tons!

Have a good weekend.

Latest USDA weather update for western FSU

For the first half of the week, light rain and snow showers prevailed with temperatures averaging up to 5°C above normal.

During this period, snow cover (2-10 cm) was confined to northern-most growing areas and to southern portions of the Southern District.

By week’s end, however, below-normal temperatures accompanied a developing storm system, resulting in widespread snowfall (5-30 mm liquid equivalent) from Ukraine into central Russia, with lesser snow accumulations closer to the Black Sea Coast.

The late week snow provided beneficial insulation (snow pack of 5-15 cm, locally more than 25 cm) to dormant winter crops across much of the region.

Another possible reason why Ukraine grain exports are falling behind?

Reading plenty of reports that Ukraine grain exports are falling behind because of a lack of grain wagons and tightened rules on transportation by trucks.

This has led to at least two interested organisations that I am aware of publicly complain to the government.

Changes in law limiting the size of trucks on Ukraine’s roads and lack of investment in railways is no doubt implicit, which news agencies have readily latched on to, but changes to VAT rules is more likely to have had a greater influence.

Previously farmers kept all the VAT element of sales in a separate account which could then be spent on specific items required for production, from memory included fuel, feed, fertiliser, seeds and pesticides.

In January this year the law changed so that 80% of VAT has to be paid to the government, no great surprise then that farmers are hanging on to grain and looking to sell for black cash.

While you can never be totally sure of the situation, the lack of trucks queuing up at silos when lines would normally be measured in kilometres and recent full on tax inspections (think raids, balaclavas, guns) suggest a lack of grain wagons is not necessarily the root cause.

There will be a limit on black cash grain sales as there will be a limit on where it can go and it won’t be long before farmers need to commit to input purchases, so, keeping in mind that January trade slows right down, come February we might see a rush on exports and prices dropping in the ensuing melee.

Will Russia's ASF outbreak affect grain exports?

African swine fever seems to be an increasing problem in Russia judging by the amount of reports currently being issued by the veterinary and phytosanitary watchdog.

The government are saying that quarantine measures being imposed in southern Russia will not affect grain exports from the region, which to my mind suggests it may well actually do precisely that.

The virus can be transported on machinery, clothing and presumably grain which would then make sense to restrict exports to stop it spreading further afield.

I’m not an expert on animal pathology but what I do know is that ASF was first detected in eastern and northern Europe in 2007 and is now considered to be endemic in domestic pigs in Russia.

The virus vector is a tick which can survive in the absence of a hosts for up to five years and once a pig is infected it sheds large quantities of the virus making it highly contagious to other pigs resulting in high mortality rates.

Adding to that, the virus can remain viable for 15 weeks in chilled meat and up to six months in processed hams, making it an incredibly difficult pathogen to contain.

How big of a problem is it in Russia?  I don’t know but the veterinary and phytosanitary watchdog have made 52 separate announcements on their website relating to ASF since the beginning of September.

Latest USDA weather update for western FSU

Cold, dry weather prevailed over much of the region.

Colder than-normal weather (2-8°C below normal) kept winter crops dormant from central Ukraine into central Russia and ushered winter wheat into dormancy along the Black Sea Coast.

Sunny skies prevailed, encouraging the final stages of corn harvesting in Ukraine.

Overall, winter crops entered dormancy in favorable condition, although snow cover remained shallow (less than 10 cm) and confined to northern winter wheat areas.

Russia's final winter planting figures just in

Russia reports that winter plantings are complete for harvest 2017.

Actually they go on to say almost complete, 99.9% complete, with some planting still taking place in the North Caucasus but these are effectively the final planting figures.

Total reported plantings now stand at 17.3 million hectares (17.1mha in 2015) so previous Ministry forecasts in excess of 18mha were way off the mark.

Wheat stands at 14.81mha; rye 1.64mha, barley 0.55mha and triticale 0.28mha.

The South accounts for 34.9% of the total area, Volga 26.4%, Central 22.6% and the North Caucasus 12.8%. 

Monday's Black Sea news roundup

Russia’s Ministry of Agriculture report that farmers have purchased 11% more fertiliser this year than last, which if read in conjunction with all the other announcements about increased productivity suggest farmers are heading for another bumper crop in 2017.

History, however, shows us that the correlation between fertiliser use in Russia and crop yield is weak, like no statistical correlation at all, kind of weak, so I wouldn't read too much into it.

Elsewhere and the Russian Government published a “significantly modified” draft of the quarantine phytosanitary control of imported planting seeds and planting materials regulations according to the USDA.

The inference seems to be that they are extremely bureaucratic, cumbersome and effectively amount to a trade barrier.  It’s being hammered out in the WTO as we speak so watch this space.

Meanwhile in the southern Russia region of Krasnodar Krai, an outbreak of African swine fever could disrupt grain exports if the Russian veterinary and phytosanitary service, Rosselkhoznadzor, decide to impose quarantine restrictions to prevent the spread of the disease.

The head of Rosselkhoznadzor, Sergei Dankvert, said that a decision on a quarantine zone would be made this week.  Watch this space.

Ukraine and the government has submitted to the Verkhovna Rada a draft law on the basic principles and requirements for organic production and certification.

I assume the standards will naturally be aligned to IFOAM standards thus allowing the eventual organic produce that will appear once this is all in place to be exported to the EU where the market for organic produce will be because I doubt very much if there will be any sizeable market in Ukraine.  

I’m sure someone has checked, watch this space.

This weeks Black Sea news and events roundup

Ukraine is launching a three year pilot project, initiated by International Finance Corporation (IFC), to improve quality of grain in Mykolaiv, Odesa, Kirovohrad and Poltava regions.

They don’t mention how they will do this but it will be interesting to hear the announcements should they make any.

Russian milk production is up 1.9% this year compared to the same period last year to 12.7mmt according to the Ministry of Agriculture who then go on to say the average milk yield is 4,976kg per cow, up 192 kg (4%) but fail to mention how long the lactation of that cow is.

Russian pig production is also up, this time by 13.5% in live weight compared to the same period last year and amounted to more than 2.8 million tons while, Rusagro, one of Russia’s largest agri holdings, announced the construction of new pig-breeding complexes with the combined capacity of 45,000mt live weight.

Russia has also just opened a large-scale distribution and logistics centre for fertiliser, machinery and plant protection products in Krasnodar Krai.

The International Grains Council (IGC) gave nothing to farmers when they published their latest forecast for 2016/17 total world grain, up 8mmt on previous year at 2,077mmt, due in part to a larger Black Sea wheat crop.

Property agents Brown & Co have opened an office in Romania expanding their influence in Eastern Europe saying the country could be one of the most lucrative farmland markets of the future.

Egypt confiscated 18,000mt of Russian wheat at one of their ports this week, not for ergot as you might expect given their stance on that touchy subject but for insects.

Animal nutrition company Nutriad, analysed 73 wheat samples from across Poland and found 70% were contaminated with DON and 30% with ZEN and HT2-toxin adding more weight to the argument that this year’s wet season has caused quality issues right across Europe and the Black Sea.

The latest USDA weather update for Ukraine and western Russia reported cooler weather with widespread rain and snow.

This week saw us try our hand at flying a drone across some wheat in central Russia, which we hope to be doing more of during next years crop tours, you can see the footage here.

Next week and I’m off to the UK’s CropTec show, the essential technical and business event for arable and mixed farmers, which will be packed with innovative features and content, apparently. Drop me a line if you want to meet up for a pulled pork roll.

Right then, where is my tweed jacket, checked shirt, chino's and brogues?

November Black Sea crop reports now available

Earlier this month we completed a 1,600km crop tour of Russia and Ukraine specifically to look at the post planting condition of wheat prior to winter.

Reports and short videos for each countries tours are now available (priced $250), drop me a line if you would like to purchase copies and and support our efforts to bring independent insight into one of the most important crop producing regions of the world.

Russian pig production up 13%

Russian Ministry of Agriculture report that for the first 10 months of this year, pig production

increased by 13.5% in live weight compared to the same period last year and amounted to more than 2.8 million tons.

Last week, one of Russia’s largest agri holdings, Rusagro,  announced they had approved the construction of three pig-breeding complexes in Tambov with the production capacity of 40-45,000mt live weight.

The project has been approved by the Ministry of Agriculture and had a total investments estimated at 7.5 billion RUB (116 million USD).

During October, the average price of pigs live weight was 100 RUB/kg (1.55 USD/kg).

Russia harvest 75mmt of wheat

Russian Ministry of Agriculture report the 2016 wheat harvest reached 75.8mmt, 19% more than last year (63.9mmt in 2015).

Yield was 2.79mt/ha across 27.2mha which compares with 2.51mt/ha across 25.5mha in 2015.

Although production is up 19% on last year, yield per hectare is up 11%, which is good but in my opinion comes from weather rather than fundamental changes in management.

Essentially 2016 was a wet year and crops grew.

The rest of that increase in output has come from an increase in hectares, up 7% year-on-year.

So, just for example, if this years yield had been the same as the three year yield average then output would have been 65mmt.

My point being that if in 2017 we have a dry or hot year or general weather conditions are not conducive to crop growth then even with extra hectares, overall production would drop significantly.

And after four good years in a row, Russia is overdue a difficult growing season.

Latest USDA weather update for western FSU

Cooler weather returned, accompanied by widespread rain and snow in western and southern portions of the region.

After last week’s warmth, near- to below-normal temperatures (up to 4°C below normal) ensured winter crops remained dormant and resistant to freeze injury across all but southern-most growing areas.

However, weekly average temperatures were below 5°C even in southern Ukraine and the Southern District — save for the immediate Black Sea Coast — indicating southern winter wheat was easing toward dormancy.

A fresh snowfall blanketed winter crop areas early in the period, though somewhat warmer conditions during the latter half of the week eroded the snow depth and coverage; at week’s end, snow was shallow (2-10 cm) and mostly confined to central and northern Russia.

Early-week rain and snow (10-50 mm, liquid equivalent) over the southern half of the region hampered late corn harvesting in Ukraine but maintained abundant moisture reserves for winter crops.

Ukraine harvest 59mmt of grain

Ukraine Ministry of Agriculture report the current harvest stands at 59.2mmt of grains (58.4mmt in 2015) from 13.3mha or 93%.

The overall average yield is 4.46 mt/ha with the breakdown looking like this;

• corn 20.2mmt from 3.2mha (77%) with an average yield of 6.21mt/ha
• sunflower 13.2mmt from 5.8mha (97%) with an average yield of 2.23mt/ha
• soya 3.9mmt from 1.7mha (95%) with an average yield of 2.28mt/ha

As of November 8, farmers had planted 6.9mha of winter crops for H17 or 94% of the planned area, up 316kha on 2015.

This includes 5.8mha of winter wheat and triticale, 866kha of winter barley, 157kha of winter rye and 836kha of winter oilseed rape.

Russia's agricultural policy for the next four years

Russia’s Minister of Agriculture, Alexander Tkachev, reported to the plenary session of the Federation Council on the preliminary results for the agricultural sector 2016.

He started of by saying that although the country is going through a difficult economic period, agriculture is providing a bed of stability, which is not something you often hear said about farming.

He then referenced the continued government support for the industry before going on to highlight this year’s grain crop of 117mmt which is the highest for the last forty years.

To further ensure food security he talks about horticultural output, specifically the production of greenhouse vegetables.  The Minister states that it is necessary to increase production by one million tonnes by 2020 which will require the construction and modernisation of two thousand hectares of greenhouses for the next five years.  (If you build and commission greenhouses, now might be a good time to apply for a Russian business visa).

Fruit was the next topic with similar talk of increased productivity this time by 30% with an extra 72 thousand hectares of orchards which will increase fruit production to 500 thousand tonnes in five years’ time.  Sounds easy when you put it like that.

He then highlights the 2016 livestock sector so far including a 5% increase in livestock and poultry output, 14 million tonnes of live weight produced, meat exports growing by 60% and exceededing 150 thousand tonnes.

This is followed by forecasts including an increase in cattle and poultry live weight production by 10% that will reach almost 15 million tonnes by 2020.

Milk production is forecast to increase by 3% per year, domestic dairy products increase to 7 million tonnes by 2020 (replacing 4 million tonnes currently imported from Belarus so no quarter given there to the Eurasian Economic Union).

To achieve this extra productivity in the dairy sector it will be necessary, naturally, to modernise the existing production facilities which will be achieved through a series of direct and indirect subsidies, intervention to form fair prices for milk (like that works), protect domestic producers from unfair competition (selective use of WTO?), work with the Customs Union on technical regulations, increase fines and adjust the balance and volumes of dairy products imported into Russian.

In other words plenty of carrot, plenty of stick.

Farm machinery and the policy is more of the same; continued state support for manufacturers; domestic equipment purchases increasing from 40% to 55% and a pledge to maintain the level of subsidies for agricultural machinery to keep pace with the acquisition of new agricultural machinery as old kit is disposed.  (If you’re an international machinery manufacturer or dealer, probably no need to apply for that new Russian visa).

There was then talk of streamlining and simplifying the subsidy administration with a unified regional subsidy beginning in 2017.

So, there you have it, the Russian agricultural policy for the next few years will be a bit like a matreshka doll, a gift that just keeps giving.

Latest USDA weather update for western FSU

Warmer weather returned, accompanied by widespread rain and snow in western and northern portions of the region.

After recent cold weather ushered winter wheat into dormancy in all but southern-most growing areas, a strong southerly flow caused daytime highs to jump into the teens (degrees C) from central Ukraine into southern Russia, with lower to middle 20s observed closer to the Black Sea Coast.

The anomalous warmth (up to 8°C above normal) melted much of the region’s snow cover and reduced winter crop cold hardiness.

Moderate to heavy rain and wet snow (10- 65 mm liquid equivalent) accompanied the warm air’s arrival from Ukraine and Belarus into central and northern Russia, maintaining abundant to excessive moisture supplies for dormant winter crops.

At week’s end, the wildly fluctuating temperatures continued, as sharply colder air along with locally heavy snow and ice returned to western and northern portions of the region.

Ukraine agricultural exports reach $10 billion

Ukraine’s Ministry of Agriculture report that over the first nine months of 2016 the country exported $10.4 billion worth of agricultural products.

This represents around 40% of total exports highlighting the significance farming has in the re-developing Ukrainian economy and is up slightly on the same period last year when they exported $10.2 billion worth of agricultural products.

Ukraine’s State Statistics Service report that from January to September this year, the largest export sector was plant products worth $5.5 billion representing around 21% of the total exports including $4.2 billion of cereals (16% of total exports).

Fats and oils of animal or vegetable origin came in next with $2.7 billion worth of exports accounting for around 10% of total exports, finished food products worth $1.6 billion (6.2% of total exports) and $0.5 billion (2.1%) worth of live animals and animal products.

During the same period Ukraine imported $2.78 billion of agricultural products representing 10% of total imports leaving a positive balance of trade of agro products of $7.6 billion.

Russia harvest over 121mmt of grain

Russian Ministry of Agriculture report the current harvest stands at 121.8mmt of grains from 45.2mha (43.8mha in 2015) or 95.7%.

The overall average yield is 2.69mt/ha compared to 2.45mt/ha in 2015 with the breakdown looking like this;

• corn 11.4mmt from 2.0mha (69%) with an average yield of 5.69mt/ha
• sunflower 10.4mmt from 6.6mha (88%) with an average yield of 1.58mt/ha
• soya 3.1mmt from 2.0mha (93%) with an average yield of 1.54mt/ha

As of November 14, farmers had planted 17.2mha of winter crops for H17 or 99% of the planned area (16.2mha in 2015).

Early season forecast on Russian grain exports revised downwards

Analysts are starting to rein in their forecast on Russian grain exports made earlier in the season.

Previously high predictions were driven by reports of record breaking crops and the not unreasonable assumption that all this extra grain would find a home outside Russia.

But it seems that as questions started to be asked about the quality of that grain, previous record breaking export forecast have started dropping.

The Russian Ministry of Agriculture now report their grain export forecast for July 2016 to June 2017 is 35mmt, down from 40mmt, including wheat from 30mmt to 28mmt.

Rusagrotrans forecast 35.4mmt, down from 37mmt, including wheat down from 28mmt to 27mmt and IKAR lowered their forecast from 40mmt to 39.4mmt including wheat from 30mmt to 29.5mmt.

Russia’s Ministry also  reported that, as of November 9, grain exports for MY16/17 are down nearly 5% on the same period last year at 14.017mmt (14.706mmt in 2015).

Rusagrotrans initial October export forecast was 3.7mmt, but they say that due to bad weather, specifically wind keeping water levels low in the Azov and stormy conditions in the deep water Black Sea ports, it dropped to 3.2mmt, 

Russia has the capacity to handle around 4.0mmt of grain exports each month so they could still, in theory, export a further 32mmt on top of the 14mmt already shipped.

Except that quality issue still hasn’t gone away.  Couple of weeks back Russia’s phytosanitary service released a report (here) on barley quality saying that many experts had called into question the quality of this year’s crop without having any reliable data. 

To be fair they didn’t shy away from the results which showed that only 4% of the sample was 1st class compared to 14% last year.  My assumption was they would conduct a similar survey for wheat but I haven’t spotted anything yet.

Ukraine €400 million EIB agri-loan one step closer

Ukraine’s Minister of Agriculture, Taras Kutovyi, met with the Vice President of the European Investment Bank (EIB) to discuss a project which will provide €400 million worth of credit for small and medium farmers to make a “qualitative leap in the development of domestic agriculture”.

Bearing in mind that farms classed as small and medium in size in Ukraine are holdings that measure in thousands of hectares then this is not necessarily about subsidising small holdings.

The Minister said at least 70% of the fund will go to SME’s with public sector operators, research stations, laboratories, institutions and the like receiving 30%.

The project is expected to run from 2016 to 2020 with loan terms over 12 years with a grace period of four and is expected to be 50% co-funded with Ukraine banks.

Eligible project subject areas include primary grain and oilseed production and drying, cleaning, sorting, testing and storage of grain and oilseed.

Latest WASDE Black Sea report highlights

Latest WASDE report is out, here’s some highlights.

WHEAT:  Projected 2016/17 production for Black Sea remains unchanged at Russia 72.0mmt; Kazakhstan 16.5mmt; Ukraine 27mmt.

The largest beginning stocks change is for Ukraine on expectations of lower food use offsetting higher feeding. 

Global use for 2016/17 is raised 0.8 million tons led by increases in feed use for Ukraine, Canada, and Russia but partially offset by reduced food use in Ukraine. 

As global supplies are rising faster than use, ending stocks are raised 0.9 million tons and remain record large. 

COARSE GRAINS:  Projected 2016/17 production for Black Sea and FSU-12 increases 3.1mmt to 168.5mmt with FSU-12 now 90.4mmt; Russia 40.0mmt; Ukraine 38.1mmt.

Corn, projected 2016/17 production for FSU-12 and Ukraine has increased 2.5mmt with FSU-12 gaining an extra 1.5mmt to 45.5mmt and Ukraine gaining an additional 1.0mmt to 27.0mmt.

Ukraine corn production is raised based on near-record yields reported by the government and Russia corn production is higher this month with a projected record yield, based on harvest results to date. 

(Latest official figures place the Ukraine corn harvest 70% complete and the Russian corn harvest 64%; based on the amount of standing corn we saw on last week’s crop tour would suggest these figure are perhaps wishful reporting).

Corn exports are projected higher for Ukraine and Russia.

Ukraine harvest 57mmt of grain

Ukraine Ministry of Agriculture report the current harvest stands at 57.2mmt of grains (57.7mmt in 2015) from 13.0mha or 91%.

The overall average yield is 4.40 mt/ha with the breakdown looking like this;

• corn 18.1mmt from 2.9mha (71%) with an average yield of 6.07mt/ha
• sunflower 12.7mmt from 5.7mha (97%) with an average yield of 2.23mt/ha
• soya 3.8mmt from 1.6mha (92%) with an average yield of 2.26mt/ha

As of November 8, farmers had planted 6.8mha of winter crops for H17 or 93% of the planned area, up 328kha on 2015.

This includes 5.8mha of winter wheat and triticale, 851kha of winter barley, 157kha of winter rye and 819kha of winter oilseed rape.

Russia harvest 120mmt of grain

Russian Ministry of Agriculture report the current harvest stands at 120.3mmt of grains from 45.0mha (43.8mha in 2015) or 95.3%.

The overall average yield is 2.68mt/ha compared to 2.44mt/ha in 2015 with the breakdown looking like this;

• wheat 75.8mmt from 27.2mha (98%) with an average yield of 2.79mt/ha
• barley 19.1mmt from 8.1mha (97%) with an average yield of 2.35mt/ha
• corn 10.5mmt from 1.9mha (64%) with an average yield of 5.64mt/ha
• sunflower 10.1mmt from 6.4mha (86%) with an average yield of 1.58mt/ha
• soya 3.0mmt from 1.9mha (89%) with an average yield of 1.55mt/ha

As of November 8, farmers had planted 17.1mha of winter crops for H17 or 99% of the planned area (15.8mha in 2015).

Latest USDA weather update for western FSU

Cold weather persisted, with the season’s first snow observed across central and northern growing areas.

Temperatures during the period averaged 2 to 4°C below normal, with winter wheat dormant in all but southern-most portions of the region.

Widespread moderate to heavy precipitation (10-50 mm liquid equivalent) was reported, though amounts were somewhat lighter (less than 10 mm) in south-central Ukraine.

Snow was reported from northern Ukraine into central Russia, though warmer weather changed the precipitation over to rain during the latter half of the period.

Nevertheless, snow cover (5-20 cm) was widespread at week’s end from northeastern Belarus into central Russia.

Final Black Sea crop tour of 2016 safely home

Back in the office after a busy week on the road assessing winter wheat in Russia and Ukraine.

I am now writing up our observations and assessments of the wheat but also some additional thoughts on the current corn crop.

I will be updating out crop tour Twitter account @BSCT_01 with pictures and video so if you subscribe be sure to check them out.

If you're not subscribing but think you might like to then feel free to drop me a line for details.

Thanks go to all those who helped out on this and the previous tours throughout 2016, couldn't do it with out you.

Latest USDA weather update for western FSU

The weather pattern remained stagnant, with cold, dry conditions in the east contrasting with moderate to heavy rain in western-most portions of the region.

For the second consecutive week, moderate to heavy rain (10-60 mm) was reported from Moldova northward into western Belarus, maintaining adequate to abundant soil moisture for winter crop establishment.

Elsewhere, dry weather facilitated seasonal fieldwork, including corn and sunflower harvesting in Ukraine.

Temperatures for the week averaged 3 to 6°C below normal from central Ukraine into Russia, with hard freezes (-10 to -2°C) reported in all but the southern-most winter wheat areas.

Winter wheat entered dormancy from central Ukraine into northern and central portions of Russia’s Southern District (as far south as the Rostov Oblast), where 14-day average temperatures were below 5°C.

Weekly average temperatures above 5°C were confined to the immediate Black Sea coastal areas, indicating wheat was not yet dormant.

Final Black Sea crop tour of 2016 just about to get underway

We are about to kick off the final Black Sea crop tour of 2016.

Once I finish writing this I will head off to the airport to start the journey that will take me through Russia and Ukraine where I will be taking a look at the condition of the recently planted winter crops with a focus on winter wheat.

The aim is to take a view on how well the crop will stand up to the rapidly approaching winter before it disappears beneath snow because once the snows do arrive we have no way of telling what is happening to the crop until the spring thaw.

I will be posting pictures, video and commentary on the crop tour members twitter account @BSCT_01 and writing up a follow up report once we have finished, see previous posts below if you would like to subscribe and join us.

You can also follow our crop tour twitter account from last year @AgronomyTour which is now open to get an idea of what we will be reporting on during the rest of this week.

Alternatively you can follow the @AgronomyUkraine twitter account completely buckshee where I will post the usual collection of encounters we happen upon as we travel around the mighty grain producing regions of Russia and Ukraine.

Wish us luck.

Kazakhstan harvest 23mmt of grain

Kazakhstan’s Ministry of Agriculture report the current harvest stands at 23.6mmt of grains (18.3mmt in 2015) from 15.3mha or 99.8% of the cropped area.

The total average yield was 1.54mt/ha compared to 1.31mt/ha in 2015.

Total output is up nearly 30%, driven in part by a 10% increase in hectares planted but also an 18% increase in yield per hectare reflecting the favourable weather conditions experienced over much of the Black Sea region this year.

We are hoping to include a crop tour through Kazakhstan's grain growing region next spring if we can raise sufficient funds, watch this space.

Ukraine harvest 53mmt of grain

Ukraine Ministry of Agriculture report the current harvest stands at 53.7mmt of grains (53.3mmt in 2015) from 12.5mha or 87%.

The overall average yield is 4.30 mt/ha with the breakdown looking like this;

• corn 14.7mmt from 2.4mha (59%) with an average yield of 5.90mt/ha
• sunflower 11.8mmt from 5.4mha (92%) with an average yield of 2.19mt/ha
• soya 3.4mmt from 1.5mha (86%) with an average yield of 2.19mt/ha

As of October 28, farmers had planted 6.4mha of winter crops for H17 or 87% of the planned area, up 279kha on 2015.

This includes 5.5mha of winter wheat and triticale, 698kha of winter barley, 152kha of winter rye and 796kha of winter oilseed rape.

Russia harvest 119mmt of grain

Russian Ministry of Agriculture report the current harvest stands at 119.3mmt of grains from 44.7mha (43.5mha in 2015) or 94.7%.

The overall average yield is 2.67mt/ha compared to 2.42mt/ha in 2015 with the breakdown looking like this;

• wheat 75.8mmt from 27.2mha (98%) with an average yield of 2.79mt/ha
• barley 19.1mmt from 8.1mha (97%) with an average yield of 2.35mt/ha
• corn 9.2mmt from 1.6mha (57%) with an average yield of 5.59mt/ha
• sunflower 9.2mmt from 5.8mha (77%) with an average yield of 1.60mt/ha
• soya 2.7mmt from 1.7mha (78%) with an average yield of 1.59mt/ha

 As of October 27 farmers had planted 16.7mha of winter crops for H17 or 97% of the planned area (15.6mha in 2015).

Russian barley quality officially lower than last year

Russia’s veterinary and phytosanitary service, Rosselkhoznadzor, are assessing the quality of this year’s grain crop.

The reason, they say, is because many experts have called into question the quality of this year’s harvest without having any reliable data (me included) and, presumably, they want to straighten the records with some reliable data.

The Centre for Grain Quality Assessment is working on determining the quality of the new grain crop in 40 major grain-producing regions of Russia.

Today they released some information on barley quality with, I assume, wheat to follow on later.

I’ll be honest here and say that it’s a bit tricky to penetrate and translate the data but this is what I think they are saying.

Barley is divided into two classes: 1^st class for human consumption and 2^nd class for feed and alcohol production (that will be industrial alcohol and not malting).

This year 2.5mmt of barley has been assessed or 38% of the gross yield from the sampling region resulting in 1^st class 4%; 2^nd class 96%.

Last year the survey assessed 47% of the gross yield from the sampling region resulting in 1^st class 14%; 2^nd class 86%.

The Centre for Grain Quality Assessment say “today we are witnessing a shift in the balance of classes for barley from 1 toward 2 compared with previous years” but warns us that that such a transfer “should not be a cause for excitement as the information will still be supplemented and refined”.

Don't know about you but a shift from 14% to 4% is pretty exciting to me, can't wait for the wheat results (I probably should get out more).

Ukraine wheat plantings down a second successive year

Earlier this season Ukraine’s Ministry of Agriculture had forecast 7.4mha of winter wheat will be planted this fall but have since dropped their forecast to 6.2mha, which, coincidentally is exactly what has just been harvested.

As of Tuesday this week the official plantings for winter wheat and triticale stood at 5.359mha, about the same at the same point last year, so it’s conceivable that growers could finish above 6.2mha.

Except last year was dry and this year is wet; you can plant in the dry but it's awfully difficult to plant in the wet.

As we reported at the beginning of this week, Ukrainian farmers will have to get a move on to plant that final million hectares in the next ten days.

Planted hectares will rise further as reporting data filters through the system but wet, cooler conditions, restricted cash flow, general uncertainty and attractive spring planting options will do nothing to encourage farmers keep the planters in the field any longer than they have to.

The other consideration to take into account is what will the winter do for crop survival?  

Last year Ukraine ended up harvesting 6.2mha but plantings had stood at 6.7mha.  

Winter kill is usually around 5% which would mean a 6.2mha planted crop would turn into a 5.9mha harvest.  

But winter kill can be 10% or higher so 6.2mha could end up as 5.6mha or even 5.3mha.

I will be taking a look at the condition of Ukraine (and Russian) wheat next week primarily to assess how well it might stand up to the fast approaching winter, check out previous posts below to find out how to follow and receive pictures, video and reports directly from Ukrainian (and Russian) fields.