June 1, 2012

Black sea grain crop drought damage reduced by rain

 

 

Damaged by the severe drought, hopes that the 2012/13 harvest will not worsen are raised by rainfall over the past week in key grain - growing regions of Russia and Ukraine.

 

"The situation has stabilised. There is no reason to reduce our forecasts now, because on average the situation in the south is normal. We maintain our estimates," a trader in Russia said.

 

He expected Russian wheat exports in the year from July 2012 to June 2013 to fall by 40% from this year's record of 20.5 million tonnes due to the combination of a spring drought and low stocks at the close of the year.

 

The wheat harvest in the coming agricultural year will decrease by 7 million tonnes from this year's 57 million tonnes, the trader said, adding that attention is switching now from southern regions to Siberia.

 

"There are risks of drought in Siberia; it is worth keeping an eye on the weather there," the trader added.

 

Global wheat prices have risen in recent weeks on concerns that adverse weather in the world's top suppliers - the United States, Russia and Australia - are affecting output.

 

The prices of benchmark Chicago wheat futures climbed more than 17% in the week to May 20, its biggest weekly gain in 16 years.

 

Since then, however, rains have limited damage. Wheat edged lower in Asian trade, falling for six out of seven sessions.

 

Weather forecasters expect rainy weather in Ukraine's central and southern regions late this week. They said the temperature would be at about 20-23 Celsius degrees (68-73 Fahrenheit). They see no rain in eastern and northern parts of the country.

 

"We plan to review our forecast for Ukrainian spring grains after rains," said Yelizaveta Malyshko from the UkrAgroConsult consultancy.

 

Rain fell overnight in southern agricultural regions of Russia and further rainfall expected in the coming days, the state weather forecaster said.

 

But concerns over the new crop may switch to the Urals and Siberian regions by the end of May because of a low level of moisture in the soil, SovEcon agricultural analysts said this week.

 

Ukraine Agriculture Minister Mykola Prysyazhnyuk told Reuters that frosts in January-February and drought during the sowing could reduce Ukraine's wheat harvest to 12.0-12.5 million tonnes this year from 22.3 million in 2011.

 

Ukraine sowed about 7 million hectares for winter wheat, but the poor weather reduced the area by 1.45 million hectares, he said, adding that favourable weather may increase the 2012 wheat harvest to about 14 million tonnes.

 

The former Soviet republic had expected a crop of about 45 million tonnes but raised its estimates after the rains in eastern and southern regions.

 

"Taking into account recent rains in eastern and southern Ukraine we can get 47 to 50 million tonnes of grain this year," Prysyazhnyuk said.

 

That would still amount to Ukraine's third-highest grain harvest in 20 years, following last year's record of 56.7 million tonnes.

 

The Russian government's current forecast calls for the total harvest in the coming agricultural year to equal the previous year's result of 94 million tonnes.

 

The government had considered reducing the forecast about a week ago but decided to keep its estimate as the situation changed for the better, a government source told Reuters.