August 22, 2011


Ukraine's wheat upgrade boosts global output quality



The agriculture ministry of Ukraine has strengthened the uncertainty over the quality of the global wheat crop by upgrading its hopes for its own crop just as private observers are preparing for downgrades.


The ministry said that the proportion of milling wheat in its crop this year "amounts to 70%, against 30% of feed wheat".


The ministry, which failed to expand on its reasoning, had last month forecast a milling figure of about 60%.


The statement is in contrast with that of many other forecasters, who believe that persistent harvest rains did substantial damage to grain quality. By encouraging sprouting, harvest moisture lowers starch and gluten levels.


HlibInvestbud, the grain trader, has estimated that milling wheat will account for 40-45% of the crop.


UkrAgroConsult, the influential crop consultancy, on Friday (Aug 19) said that it was currently estimating the milling percentage at 45%.


"The share could go down to 40%. This is due to rains," Sergey Feofilov, the UkrAgroConsult general director.


The ministry statement comes amid a drive by the country to improve its grain exports, after a weak start to 2011-12 blamed by many merchants on levies which have hit the country's ability to compete with neighbouring Russia.


Ukraine has also failed as yet to work its way back onto the list of countries from which state grain buyers in Egypt, the world's top wheat importer, will purchase.


Egypt on Thursday ordered a further 180,000 tonnes of Russian wheat, taking total purchases from Ukraine's neighbour above one million tonnes in less than two months.


And Ukraine's comments add to the questions over the quality of the world wheat crop, with central Europe too suffering damaging harvest rains.


At FCStone's Dublin office, Jaime Nolan said: "Reports on quality vary widely from one region [of central Europe] to another. But the growing trend would appear to be suggesting a fall of around 1% in overall average protein levels for higher grade wheat.


"However, we do note that much of the hardest-hit areas across north eastern Germany and Poland remain in the field," he said, flagging rain delays to the Scandinavian harvest too.


In North America, the harvest is also late, largely because of the difficulties farmers had in spring sowings, with 13% in silos as of Sunday, one-third of the proportion a year before.


Reports on quality have been mixed, with initial talk of relatively high levels of vomitoxin and poor crops in South Dakota giving way to more upbeat statements.


Benson Quinn Commodities flagged the "high protein content of the crop that has been harvested", a factor which has led to "a perception of tight supplies of 13-13.5% protein spring wheat" - grain just below the highest grades available.

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