Thursday, 23 March 2017

Russia's official statement to Turkey

In response to Turkey not imposing a ban on Russian wheat imports (they just don't want to buy any at the moment), the Russian Minister of Agriculture has posted a statement on the ministry website, here's a translation:

Statement of the Ministry of Agriculture of Russia in connection with the possible restriction of Russian agricultural products to Turkey

In recent days, conflicting information is coming from Ankara, related to public statements by representatives of Turkish authorities and experts on restricting the supply of Russian agricultural products to Turkey.

The Ministry of Agriculture of Russia is extremely surprised and disappointed by this position of the Turkish colleagues, since during the last 6 months both sides declared the necessity of normalising bilateral trade relations.

In November 2016, during a meeting with the Minister of Food, Agriculture and Livestock of the Republic of Turkey F. Chelik, we agreed on a phasing-out of restrictions in the mutual trade in agricultural products.

For our part, we have done a lot of work to remove these restrictions. Russia lifted restrictions on imports from Turkey of citrus and stone fruit, onions, cabbage, cloves and other food products. In the future, we planned to continue lifting restrictions on other types of agricultural products important for Turkey. At the same time, the Turkish side did not take any active measures to ensure access of Russian meat and dairy products to the Turkish market.

Ankara's acceptance of such a decision could lead to a complete cessation of imports to Turkey of several names of Russian agricultural products (wheat, corn, unrefined sunflower oil, sunflower meal, beans and rice).

Such actions of Turkey call into question the sincerity of intentions to build strong relationships. We do not accept and reject attempts to exert pressure on Russia in order to open the access of Turkish agricultural products to the Russian market in those sensitive areas where Russian production has been actively developing in recent years.

For our part, we will take all necessary measures to diversify the sales markets. Taking into account Russia's leading positions on the world grain market and the quality of Russian agricultural products, I am confident that we will be able to promptly reorient the supply of Russian agricultural products to other regions of the world in a short time.

I want to assure that we will continue to support Russian producers and exporters, and also maximally protect our own market in sensitive areas of agriculture so that within 5-7 years Russian agricultural producers can fully meet the needs of the domestic market in agricultural products and food.
Minister of Agriculture of the Russian Federation         
A.N. Tkachev

Wednesday, 22 March 2017

USDA February weather summary for western FSU

Conditions for dormant winter wheat were good to excellent over the region during February.

A bitter cold first half of the month had little - if any - impact on winter crops due to widespread deep snow cover.

A pronounced warm up during the latter half of the month rapidly melted the region’s snowpack and accelerated winter wheat out of dormancy in southern portions of Ukraine and Russia.

The sharply contrasting temperature regimes resulted in monthly values near normal, though daytime highs in the teens (degrees C) in southern Russia at the end of February were more typical of readings observed in late March and early April.

Precipitation was favourable in southern Russia (100-200 percent of normal), while drier-than-normal conditions (locally less than 75 percent of normal) developed during February in central Ukraine’s winter wheat areas

USDA February weather summary for eastern FSU

During February, seasonably cold, snowy conditions prevailed in the north while rain and snow boosted moisture supplies for dormant winter wheat in the south.

Central Russia and neighbouring portions of northern Kazakhstan were encased in a deep snowpack as bitter cold (-40 to -30°C) prevailed over the region.

Farther south, moderate to heavy rain and snow (100- 270 percent of normal) maintained adequate to abundant moisture reserves for dormant winter wheat in Uzbekistan.

Ukraine’s Chinese loan will be reduced

Ukraine’s Minister of Agriculture has said the credit rates for grain bilateral project between the State Food and Grain Corporation of Ukraine and Chinese corporation SSES will be reduced.

"The rate of the Chinese loan will be reduced. The amount of reduction in the discussion are subject to approval by the Chinese side. The main thing achieved principled decision “said Taras Kutovy.

It was agreed to use loan funds for the implementation of two mutually beneficial projects: the purchase of grain wagons through an open tender and supply of plant protection products in Ukraine, presumably from China.

Tuesday, 21 March 2017

Latest USDA weather update for western FSU

Unseasonable warmth eroded the region’s remaining snowpack and accelerated winter wheat development in southern growing areas.

For the third consecutive week, above-normal temperatures (4-8°C above normal) prevailed, with daytime highs topping 10°C (above 15°C along the Black Sea Coast) in Ukraine and Russia’s winter wheat areas.

As a result, crops continued to develop up to 4 weeks ahead of average in the south, while spring grain planting progressed rapidly farther north.

At week’s end, the region’s snowpack was confined to Russia’s Volga District, more on par with the typical early-April extent.

Moisture reserves remained generally favorable for winter wheat development, though short-term dryness (less than 50 percent-of-normal precipitation over the past 60 days) in central and southern Ukraine reduced topsoil moisture for vegetative winter wheat.

Rain during the period was generally confined to western-most portions of Ukraine (10- 22 mm) and Belarus (5-15 mm), though light showers (2-8 mm) dotted central and eastern Ukraine and western Russia.

However, key winter wheat areas of southwestern Russia (Krasnodar Krai in the Southern District) benefited from 5 to 15 mm of rain at week’s end.

Latest USDA weather update for Europe

Mild, dry weather continued to promote earlier-than-normal winter crop development, though late-week showers boosted moisture supplies in key northern growing areas.

Winter crops over northern and eastern Europe broke dormancy two to four weeks ahead of average, and were now advancing through the vegetative stage of development in mostly good condition.

Winter dryness had been a concern in France and parts of Germany, though early-March rain coupled with this week’s late-arriving scattered showers (2-20 mm) eased lingering dryness concerns and improved soil moisture supplies for spring development.

Sunny, mild conditions (1-3°C above normal) also promoted winter crop development in Poland and the northern Balkans before light to moderate showers (2-15 mm) returned at the end of the period.

Meanwhile, a pair of slow-moving storms triggered widespread showers across southern Europe.

One storm produced 5 to 50 mm of rain (locally more) in southern Spain and southwestern France, while the other brought moderate to heavy showers (10-60 mm) to the southern Danube River Valley.

In the former, the moisture was beneficial for vegetative to heading winter grains in Spain, though northern parts of the country (Castilla y León) missed out and are in need of moisture.

In the lower Danube River Valley, the rain maintained adequate to abundant moisture supplies for wheat and rapeseed development.

Black Sea agribusiness news update in brief

In January 2017 Ukraine’s exports of agricultural products amounted to $1.36 billion, the highest for the last four years.

Ukraine’s State Forestry Agency and the Forestry Commission Scotland will join forces to conduct joint research on improving the viability of Ukraine’s forest ecosystems.

So far this spring season Ukraine has planted 359,000 hectares of spring cereals and peas which represent about 15% of the total forecast area of 2.40mha.

Ukraine is also reporting 5.7 million hectares or 81% of winter crops has received spring fertiliser which a) doesn’t concur with what we saw last week and b) if it is then it’s too early based on the growth stage of wheat.

Russia has planted 596,100 hectares or 1.1% of the total forecast spring sowing area and also applied spring fertiliser to 5.7 million hectares or 32.8% of the total planted area which is starting to make this whole Black Sea crop reporting thing appear more like an inter-country competition.

Russia’s Ministry of Agriculture reports current fertiliser stocks are up 7% on last year, up 1% on the last report at the beginning of March.

Russian January and February milk production increased by 2.7% compared to the same period last year and amounted to 2.39mmt.

The Director of the Department of Animal Husbandry and Breeding noted the increase in production highlighted the underlining priority in developing the milk sector (that or more cows calved).

Monday, 20 March 2017

The first Black Sea crop tour of 2017 is in the bag

We have safely and successfully completed our first Black Sea crop tour of the 2017 season.

Last week we travelled 3,000km from Moscow in Russia to Odessa in Ukraine, assessing the post-winter condition and yield potential of the current wheat crop.

I am now back in the office processing the results and writing up the reports which will include yield forecasts, crop condition assessment, comments and opinion.

We will email the reports out to subscribers later this week plus we hope to have some short videos made up so you can see what the crop looks like for yourself.

During the tour, we posted 64 pictures and six short videos on a Twitter account that is open to subscribers, we will post more videos there this week as we edit the large amount of footage we took.

The blog will be running a reduced service this week as we concentrate on writing up the results.

If you would like to subscribe to access the result from this tour and the rest of the tours planned through the 2017 season then email me at blackseacroptour@gmail and I will forward details.

Thanks to all who supported this tour and to those that assisted in making it happen.

Black Sea Crop Tours - the only independent crop assessment service operating in the Black Sea region

Sunday, 12 March 2017

The first Black Sea crop tour of 2017 is up and running

There will be a reduced service on the blog this week as we are out and about assessing the post-winter condition of wheat which will allow us to make our first yield forecast for Russia and Ukraine.

This is the first of ten Black Sea crop tours we have planned for 2017.

We will drive around 2,000km starting in Russia before crossing the border to Ukraine taking in a representative sample of the main wheat growing regions.

During the tour, we will post pictures, video and commentary on our dedicated tour Twitter account (@BSCT17) which is open to members only.

Shortly after the end of the tour, we will email members our full tour reports including our first yield forecast of the season based on our assessment of crop condition.

There are plenty of analysts currently reporting Black Sea wheat crop is in good condition but we will be the only ones that actually go there and independently take a look for ourselves.

If you would like to sign up to access the tour Twitter account and receive reports for this tour and follow the rest of the tours planned throughout the season all for only £350, then email us at and we’ll send you details on how to subscribe.

Further details can be found on our Black Sea Crop Tour 2017 page.

Black Sea Crop Tours - the only independent crop consultancy service operating in the Black Sea region.

Friday, 10 March 2017

Russia favour control of imported pesticides

Russia’s Ministry of Agriculture announced they are in favour of strengthening the control of production and the import of pesticides.

At a meeting yesterday the First Deputy Minister of Agriculture discussed the pesticide industry including measures to improve the regulatory framework for the import of pesticides. 

The Minister pointed out that with the increasing amounts of pesticides imported into Russia, counterfeit products are becoming an issue.

He goes on to say the problem is not just poor quality products but that they can also be dangerous or harmful to land and agricultural production which is a fair point, I've unknowingly bought counterfeit shampoo in the past, nearly blinded me.

The response is to tighten control of the origin and quality of imported pesticides and to encourage domestic production of plant protection products.

Reduced imports and increased production is now fairly standard ministry rhetoric but I wouldn’t expect anything much to happen anytime soon.

While it is possible that we might see some tightening of import procedures there will likely be resistance from large and well-connected farm businesses should pesticide retail price increase significantly before any substitute domestic manufacturing capacity, which will take time and investment to build, comes online. 

So Syngenta, BASF, Bayer and all the rest can breathe easy for now but you might want to consider looking at a business plan for building a factory in Russia inside the next five years.

Ukraine start planting

Ukraine's Ministry of Agriculture report spring planting is now underway in the south of the country with the first 600ha planted of which 500ha is peas, 60ha barley and 40ha oats.

Keep in mind that 600 hectares is a field in Ukraine, so the ministry is actually reporting one farm started planting.

According to preliminary ministry reports, the total planted area for 2017 is expected to reach 26.8 million hectares which are almost the same as 2016.

All grain crop planting is expected to reach 14.4mha or 54% of total crop area which the ministry conveniently report meets the standards for optimum ratio crops in the rotation whatever that is.

Planting of spring crops is forecast at 7.2mha including 2.4mha of spring cereals.

Wednesday, 8 March 2017

Russia’s food safety watchdog denies mass fusarium infection of grain

Russia’s food safety watchdog, Rosselkhoznadzor went on TV to deny mass poisoning of Russian grain.

The watchdog reported there have been 33 cases of grain contamination this season - most of them in the Caucasus and Southern Federal District.

The state standard is no more than 1% fusarium contamination and the Centre for Grain Quality Assessment say the grain they have investigated fits in with this figure.

In Russia, fusarium poisoning through eating products made with contaminated grain is called "drunk bread" as spoiled food causes symptoms similar to intoxication but can lead to more serious intestinal and gastric disorders.

Rosselkhoznadzor say the responsibility for poisoning by infected grain which hasn't happened is the fault of the public anyway by quoting doctors who say consumer ignorance is more dangerous than infected grain because citizens tend to remove mould from bread and then “quietly eat them”.

There might be a reason why citizens cut off the mould and eat the rest of the loaf.

Meanwhile, the Russian Centre for Grain Quality reported to the Russian Federation Council on the quality of the Russian 2016 wheat crop.

The volume of food quality wheat (Classes 3 and 4) reached a record level of 51mmt, or 71% of the total wheat crop.

However, both the total volume and the percentage share of wheat Class 3 to total wheat production in 2016 was at the lowest level in the last five years: 16mmt, or approximately 22% of the total wheat crop.

Furthermore, assuming Class 3 and better quality Class 4 are the pool from which exported milling wheat is sourced, then although 2016 was a large crop the total quantity of export grade wheat is almost the same as the previous year.

Tuesday, 7 March 2017

Latest USDA weather update for western FSU

Unseasonably warm weather further eroded the region’s remaining snowpack and accelerated winter wheat out of dormancy in southern growing areas.

During the 7-day period, temperatures averaged 6 to 10°C above normal, with snow cover at week’s end mostly confined to Russian crop areas north of the Southern District.

The warmth fostered rapid winter wheat greening in southern portions of Ukraine and Russia, where crops broke dormancy 2 to 4 weeks ahead of average.

Moisture supplies are favourable for wheat development in these areas, though some localised winter dryness has been noted in areas immediately adjacent to the Black Sea Coast.

Farther west, sunny skies and April-like warmth (daytime highs of 10-15°C) also promoted early spring grain planting in Ukraine and southern Belarus.

Latest USDA weather update for Europe

Unseasonably warm weather prevailed, with beneficial rain arriving across key winter crop areas of central and western Europe.

Temperatures during the period averaged 5 to 8°C above normal from Germany into Poland and the Balkans, accelerating winter wheat and rapeseed out of dormancy 2 to 4 weeks ahead of average.

The early winter crop greening has heightened the need for moisture across much of southeastern Europe following a drier-than-normal winter.

In contrast, moderate to heavy rain (15-70 mm) improved soil moisture for vegetative winter wheat in France, while lighter showers (4-50 mm) improved topsoil moisture for winter crops in Germany.

Likewise, moderate to heavy rain (10-50 mm, locally more) in the United Kingdom benefited early-developing winter crops, while lighter, variable shower activity (2-44 mm) in Spain was generally beneficial for vegetative wheat and barley.

Warmer-than-normal weather (1-4°C above normal) in England, France, and northern Spain encouraged a rapid winter crop development pace but left wheat and rapeseed in typically colder northern growing areas more vulnerable to any potential late-season hard freezes.

Monday, 6 March 2017

Monday morning Black Sea agribusiness news

Russia’s fertiliser stock is up 6% on last year prompting many to forecast another high yielding 2017 crop as a result.

Higher fertiliser stocks should, in theory, result in more crop but the correlation between fertiliser use and yield is actually weak as there are so many more variables that impact on crop growth with rain being the overarching one.

Russia is considering exporting part of its 4 million tonne state grain stockpile to free up storage space before the new crop arrives report Reuters.

With last year’s record harvest and this year’s slow pace of exports, the new season about to get underway will put pressure on the state and farmers to start clearing storage space.

But as the rouble continues to strengthen, Russian wheat remains expensive which won’t help exports and begs the question, will we see a fire sale soon?

Novorossiysk export prices for 12.5% and 11.5% protein milling wheat closed last week up $2 at $191194 FOB and $187189 FOB, respectively.

Talking of fire sales, the National Agricultural Cooperative Marketing Federation of India said it will facilitate exporting potatoes to Iran and Russia in order to avoid Punjab farmers making distress sales, which actually sounds like a distress sale.

They say they have orders to supply 2,800mt of potatoes to Russia and 5,000mt to Iran.

USDA report they think Russian and Ukraine grain area will likely grow by 5 to 10% in the next decade, which sounds about right to me although a lot less than some Russian officials have been suggesting.

Even so, 5% is still a significant amount of extra crop particularly considering Russia’s share of global grain trade has increased from 1% to 10% in the last decade.

Friday, 3 March 2017

Russia produced a record fruit harvest in 2016

Russia really does seem to have an issue with imported plant and animal breeding materials or at least the First Deputy Minister of Agriculture does.

For the second time this week he has brought up the subject of replacing foreign genetic material with home grown stuff and the development of domestic breeding lines.

First off it was cattle when, at the opening ceremony of the "Milk and Meat Industry" exhibition, he outlined a number of challenges facing the sector including the development of domestic breeding.

Now he’s turned his attention to fruit.

The Minister was taking part in an All-Russia meeting on the preparation of spring field works, in Tambov this week when he said the main problem that hinders the growth of domestic fruit production was the continuing dependence on imported planting material.

Surely using the best root stock available, be that homegrown or imported is the best option and presumably, growers are using expensive, imported materials because there isn't a domestic alternative.

Rather than a hindrance to production, I would say using imported rootstock might actually be beneficial. 

The Minister noted that the country produced a record amount of fruits and berries last year - 3.3 million tonnes, which is 15% higher than a year earlier (because it rained) but still imported 1.6 million tonnes.

Another participant at the meeting pointed out that thanks to government support the greatest number of new orchards (14,600ha) was planted last year but it will be necessary plant a further 500ha annually to achieve self-sufficiency.

The Minister said that according to experts, Russia can grow at least 12 million tonnes of fruits and berries, which means not only that they could fully support themselves they would export a substantial surplus.

Thursday, 2 March 2017

USDA upbeat on EU beef and pork

The European Union is forecast to produce and export a record volume of red meat in 2017 according to the latest USDA review.

The review goes on to say that EU beef production is increasing due to the restructuring of the dairy sector and pork production is also on the rise due to demand from China.

Since 2013, the EU has been the biggest pork exporter in the world and this year, pork exports are expected to remain strong as new markets are being sought and found, and sales are being supported by the acknowledged quality of EU pork and a favourable currency exchange rate.

After the abolishment of the milk quotas in April 2015, milk production shifted to the most productive regions and farms and as a result of this restructuring, slaughter of dairy cattle increased in the EU.

During 2015 and 2016, significant cuts were reported in Italy, Spain, Poland, France, Romania and Germany, while Ireland and the Netherlands expanded their dairy herds.

Further restructuring of the EU dairy sector will continue and additional slaughter is expected in 2017.

As a result, beef production is forecast to increase for the fourth successive year, with most of the additional production being absorbed by the domestic EU market.

Chinese demand for pork raised EU export levels to a new record in 2016.

Foreign demand for pork buoyed carcass prices, and subsequently, average fattening margins improved allowing farmers to make up for the earlier losses in 2015.

While Chinese demand weakened in the last months of 2016 driving carcass prices down, fattening margins were still positive.

These positive market conditions are expected to further support piglet production and fattening in 2017.

The EU is likely to retain its dominant position in the Chinese market based on recognised quality and the favourable exchange rate of the Euro against the Yuan and US Dollar.

This year, the EU is forecast to reach new pork production and export records.

Ukraine EU exports increase

Exports of Ukrainian agricultural products to the EU increased by $68.2 million in 2016.

The total value of agricultural products exported to the EU was $4.12 billion, nearly 27% of Ukraine's total agricultural exports (Asia accounts for nearly 46%).

As you’d expect, grain (corn, wheat, barley) was the lion’s share of exports, worth $1,279 million closely followed by oil (from sunflower, canola, soybean) worth $1,185 million and the oilseeds (canola, soybeans, sunflower) worth $587 million.

The increase in exports was mainly due to an increase in supplies of sunflower oil and seeds, soybean meal and sugar.

Increases in grain exports will likely put a strain on UK Brexit and follow on trade negotiations; as the UK on the EU's western border will more than likely end up with tariffs, Ukraine grain on the eastern border is being welcomed in with open arms.  

Russian company to invest $1bn in dairy

Rusagro, one of Russia’s largest vertically-integrated agriculture groups, will become the country's largest dairy producer if a rumoured $1bn investment goes through.

According to reports the Chairman of the Board, Vadim Moshkovich, made an announcement to that effect at the recent Russian Investment Forum in Sochi, although there is nothing currently on the company's website to substantiate this.

Rusagro reportedly sees potential in exporting dairy to China, South Korea and Japan, and as such Russia's Far East is seen as a potential location for the dairy investment.

It’s estimated that a $1bn investment would result in 0.5-0.6mmt of annual milk production which would make Rusagro the largest producer of raw milk in Russia.

To put that into context, it will require around 100,000 cows and would increase Russia's current milk output by around 2%.

The company posted 2016 Q3 sales at $815 million and are listed on the LSE with current shares valued at $13.85, down from last March when they reached a peak of $18.00.

Wednesday, 1 March 2017

Locust destroy 1,500ha of Bolivian crops

Locusts are affecting Santa Cruz, Bolivia’s agricultural powerhouse, responsible for 80% of the country’s agricultural production.

A Locust swarms of up to 10km long and travelling up to 100km per day have so far destroyed an estimated 1,500 hectares of corn, sorghum, and other crops.

Authorities have declared Santa Cruz an emergency and have started an aggressive air spraying campaign with the government releasing an initial $700,000.

It’s reported that locust migrated to Bolivia from Argentina who, in early 2016, suffered the worse locust attack in sixty years, affecting 700,000 hectares.

Both, Argentina and FAO have announced they will send experts to assist Bolivia to mitigate the attack.

Russia's Minister of Ag wants to increase domestic beef production

Russia’s Deputy Minister of Agriculture took part in the opening ceremony of the 15th trade exhibition "Milk and Meat Industry".

The Minister outlined a number of challenges facing the sector including livestock population growth, the genetic potential of animals, improvement in production technology and the development of logistics.

Particular attention was paid to the development of domestic livestock breeding and the independence from foreign genetic material which is in line with government policy of extending import substitution to include technology.

The Minister said the formation of a competitive market for specialised beef cattle is one of the priority tasks of the state and that Russian beef production has not yet reached the level of food security which is a bit of an understatement as Russia currently imports 30-40% of its beef.

So if the Minister gets his way, and if he does he will be reversing decades of decline in domestic beef production, then it looks like we can expect Aberdeen Angus steak to be replaced with Kalmykia steaks in Moscow’s top restaurants anytime soon.

Tuesday, 28 February 2017

Latest USDA weather update for western FSU

Sharply warmer weather rapidly melted the region’s snow cover and promoted early winter crop greening in southern growing areas.

During the 7-day period, temperatures averaged 4 to 7°C above normal in Ukraine and up to 14°C above normal in Russia.

The unseasonable warmth rapidly melted the region’s snow cover; by week’s end, shallow snow (2-10 cm) lingered from central Ukraine into central Russia, while snow had completely melted in southwestern Russia’s key winter wheat areas.

Daytime highs topped 10°C across the southern half of Russia’s Southern District, while daytime highs exceeding 20°C in the North Caucasus District.

The April-like warmth encouraged rapid greening of winter wheat in southern Russia, increasing the crop’s vulnerability to any potential late-season bitter cold.

Latest USDA weather update for Europe

Unseasonably warm weather prevailed across the continent, with beneficial rain in northern and eastern Europe contrasting with developing short-term drought in France.

Temperatures during the 7-day period averaged 2 to 6°C above normal, melting the remaining snow cover in Poland while encouraging unseasonably early winter crop development in central and western growing areas.

In particular, winter crops in Germany began to break dormancy up to a month ahead of average, while wheat and rapeseed in France and England were likewise developing up to a month ahead of normal.

The unusually early winter crop development in France has heightened the need for soil moisture, with 90-day precipitation averaging less than 50 percent of normal over much of the country.

In contrast, a series of fast-moving disturbances produced moderate to heavy showers (10-90 mm, locally more) from central and northern England into Germany, Poland, Scandinavia, and the Baltic States.

The rain eased dryness concerns in England and southern Germany and maintained favourable moisture reserves for spring growth in northeastern Europe.

Showers (5-50 mm) also maintained good soil moisture reserves in the Balkans, though the rain bypassed the upper Danube River Valley where localised dryness concerns have developed.

In the south, showers in southern Spain slowed cotton planting, while winter grains in Spain and Italy were advancing through the vegetative stages of development in mostly good condition.

Ukraine to start spring planting

Ukrainian farmers will start the 2017 spring grain sowing in a few days, expecting to sow a total of 7.2 million hectares of various spring grains, said the Agriculture Ministry on Monday. 

Last year Ukraine’s spring sowing campaign started on February 24.

I wouldn't read too much into a few impatient farmers getting planters out early and muddling in a bit of spring wheat, the real spring crop planting (corn, sunflower, soy) is sometime off yet.

Anyway, it's not planting date that matters, its the emergence date that counts.

Ukraine’s spring sowing campaign could rise to about 7.2 million hectares from 7.0 million hectares last year according to the Ministry of Agriculture.

They also said grain exports could reach 41mmt in the current 2016/17 season which runs from July to June having exported around 29mmt of grain so far.

Elsewhere the Ministry report sugar exports increased 33 times in the current marketing year - up to 344 thousand tons - compared to last year.

The Minister went on to say this result was achieved through systematic and coordinated work of all parts of the production (and rain, don’t forget the rain helped).

Russian rouble slows grain exports

Russia’s Agriculture Minister Alexander Tkachev said the strong rouble hinders grain exports which may be lower than the initially planned 40mmt.

He now reckons 37mmt is probably more realistic.

The Minister went on to say “we need a good grain price and it’s clear that we should not cut production.”

Analyst Alexandre Andrey at BMI Research said the rouble is currently the biggest impediment to Russian exports and a more favourable exchange rate is required to see exports pick up.

Anatoly Medetsky over at Bloomberg reports that the Russian grain trader Mirogroup Resources, stopped buying from farmers as the rouble prices demanded by growers mean the company is unable to earn a profit selling in dollars.

Monday, 27 February 2017

Black Sea agribusiness news in brief

Egypt purchased 360kmt of milling wheat from Ukraine and Russia with shipment scheduled for March and April at the average price of $208.65/mt C&F.

SovEcon cuts 16/17 Russian wheat exports forecast from 27.9mmt to 26.6mmt (USDA 28.5mmt) which is now just slightly above the previous season.

Russia’s Ministry of Agriculture reports the accumulated farmer’s supply of mineral fertilisers is up 9% on last year.

Russian PM Dmitry Medvedev has appointed Eugene Nepoklonov Deputy Minister of Agriculture; previously Nepoklonov was Deputy Head of Rosselkhoznadzor.

Concerns in Ukraine that snow, which protected winter wheat, could start to cause problems if it lasts much longer.

Ukraine’s Ministry of Agriculture preliminary report the 2017 total crop area is expected to reach 26.8 million hectares.

Favourable weather has encouraged Ukrainian farmers in the south of the country to start spring works with fertiliser applied to 600kha of wheat and 96kha of winter oilseed rape so far.

Black Sea Crop Tours is now open for membership priced at £350 for the full season’s reports, email for details.

Friday, 24 February 2017

Farming, a game of two halves; Leicester City Football Club and Black Sea farming

Leicester City Football Club sacked their manager, Claudio Ranieri.

For those of you who don’t follow English football; Claudio Ranieri took over management of LCFC in 2015 and achieved the most outstanding and historic event in any sport by taking perennial bottom of the table strugglers to win the championship that very season.

Ranked 5000/1 outsiders at the start of the season the affable Italian understood his team's strengths but more importantly, their weaknesses. 

He recognised they couldn’t compete against the giants of the premier division on football skills only so he didn’t try. 

He identified his team’s strength was running, more accurately sprinting over short distances and his squad had some of the fastest sprinters in the league so he capitalised on that.

He encouraged his team to defend strongly letting the other teams play possession but when they slipped up his guys were ready to pounce and out sprint the opposition to score more goals and win more games over the course of the season.

Apparently his team drank beetroot juice shots as its proven to make you run faster and all his guys had to do was run slightly faster than everyone else.

It worked, LCFC were crowned 2015-16 champions on the English Premier league, Ranieri was feted as a genius, given loads of accolades and signed a new four year contract.

Role on this season and his team are looking at relegation as they flounder at the bottom of the table after losing game after game after game.

What went wrong? Probably many things but the main issue being the other teams studied the bejesus out LCFC and formulated a counter strategy to cancel out their competitive advantage.

What didn’t happen was Ranieri woke up at the start of the season and said to himself, “you know what, from now on I’m going to go into work every day and do everything in my power to lose every single game.”

Yesterday the LCFC board decided the only course of action was to sack Ranieri.

Now the funny thing about football is if a team has a long run of losing games they will, statistically, have a run of winning games, even if the manager does nothing.

But what happens is that after a poor run, the board, galvanised into doing something, decide to sack the manager, there is no other course of action, they can’t sack the players, not all of them anyway, who’d play the game, they can’t sack themselves because that would be stupid, we can’t be to blame, surely.

The only candidate left is the manager, so he gets the boot, usually just after the board gives him their full support and backing.

The team then go on to have a winning streak which statistically they were going to do anyway; the board see this as exoneration, they were right, that’s why they are on the board, Champagne, Stogies and pay rises all round boys.

At this point you might be thinking, hang on, isn’t this supposed to be a blog about Black Sea farming, indeed it is, the connection being that this is the same scenario played out every season in the world of Black Sea farming.

Expat farm managers are brought in to change the old soviet way of farming and to drag the business into the 21 century and it’s a difficult job I can tell you.

Farming is tricky at the best of times, weather and global commodity markets means that much of what we do is actually outside our control, what we are trying to do is reduce and mitigate the externalities as much as we can.

On top of that every day you have a thousand fires to put out, corruption, theft, dodgy deals, sabotage, funds not arriving on time, government policy, politics, banks, lawyers and so on.

Then, after a couple of dry seasons, low yields, poor results, the board start looking around for someone to blame, they can’t sack the tractor drivers, who’d drive the combines, they can’t blame the board, that would be stupid, so who’s left?

Black Sea farming businesses don’t fail because managers are going into work each morning thinking how can I balls this up today, they fail because the understanding and comprehension of the beautiful game of farming is often not fully understood or appreciated by those in charge.

Thursday, 23 February 2017

USDA January weather summary for western FSU

In January, dormant winter wheat was well insulated by a moderate to deep snowpack over central and northern portions of the region.

However, southern Russia dealt with fleeting snow cover, though the coldest weather was coincident with sufficient snow insulation.

Precipitation averaged near to above normal in Ukraine as well as western and northern Russia (mostly falling as snow).

In contrast, dry weather (20-60 percent of normal) was reported in the Russia’s Southern District, but the lack of agricultural activity minimized the impacts of the dryness.

Overall, soil moisture reserves remained adequate for spring growth.

Latest USDA weather update for western FSU

Winter wheat remained adequately protected from bitter cold by snow cover over most of the region.

Minimum temperatures as low as -25°C across central portions of Ukraine and Russia had no detrimental impact on dormant winter wheat due to a moderate to deep snowpack (10-50 cm).

In southwestern Russia, a shallow - albeit still sufficient - snow cover (5-15 cm) protected winter wheat from nighttime readings as low as -18°C.

Overall, wheat continued to overwinter in good condition in Ukraine and Russia.

Latest USDA weather update for Europe

Warm, dry weather prevailed across much of Europe, though chilly conditions lingered in eastern portions of the continent while rain continued on the Iberian Peninsula.

An area of high pressure centred over the Balkans maintained dry, increasingly warm weather (2-7°C above normal) from England and France into Germany, Italy, and the western Balkans.

Weekly average temperatures greater than 5°C for a second consecutive week indicated winter crops broke dormancy up to a month ahead of normal in northern France and several weeks ahead of normal in England.

The warmth also reduced wheat cold hardiness in Germany and likely encouraged some early greening in western-most portions of the country.

Colder-than-normal conditions (up to 3°C below normal) lingered over the Danube River Valley, ensuring winter wheat and rapeseed remained dormant in these southeastern growing areas.

Dry weather prevailed from northern France into Poland, though some light showers (1-8 mm) accompanied a weak disturbance from central France into southern Poland.

While winter dryness does not cause the types of impacts associated with warm-season drought, pronounced 90-day precipitation deficits prevailed from France and Germany into the northern and central Balkans.

Meanwhile, another in a series of Atlantic storms triggered widespread moderate to heavy rain (5-60 mm, locally more) across much of the Iberian Peninsula, maintaining good to excellent prospects for vegetative winter wheat and barley.

Crimea to produce more milling wheat

Crimea plans to increase the production of grade 2 and 3 wheat according to the Minister of Agriculture of the Republic of Crimea.

According to the Minister, last year’s wheat harvest produced mainly grade 4 and 5 wheat which is not in demand so Crimea must develop the production of grade 2 and 3 wheat for export and domestic use.

Crimean agrarians need to realise all required agricultural works to receive a good wheat harvest, said the Minister, demonstrating a lack of understanding as to how farmers produce milling grade wheat.

The main reason Crimea produced more feed wheat last year was because it rained a lot, there’s only so much farmers can do to produce and protect protein.

Wednesday, 22 February 2017

This week's Black Sea agribusiness news in brief

Russia’s Deputy Minister of Agriculture said they have approved 15 regional banks of the 27 applications submitted for participation in the new mechanism for concessional lending to farmers.

The Minister reported they had carried out all the necessary work to bring state support to agricultural producers and that the regions should sign agreements with the Ministry as soon as possible.

He went on to make sure he was covered by saying that if agreements are not signed in the coming days the regions will not be able to receive funds intended for farmers, although he failed to mention that this possibly could have been wrapped up before Christmas rather than days before farmers start spring planting.

As of January 1, 2017 Russian grain stocks were reported at 38.9mmt which is the fourth month in a row of the highest grain stocks (y-o-y) in the last 7 years.

High stocks are because of the record grain crop (Russian state statistics preliminary data is 118mmt) and a slower pace of exports than last year.

Russia has approved subsidies that will partially compensate the construction of pig farms, modernisation of agricultural facilities, irrigation and soil improvement of agricultural land and sturgeon farming.

The Russian government clearly recognise the importance of agriculture to the economy but what’s not clear is if this level of support is above what has been available in the past.

Saudi Arabian investors Al Ramez International Group will finance a poultry farm project worth €85 million in Kazakhstan.

Construction is scheduled to begin in March 2017 and will have an estimated production capacity of 30,000mt of poultry meat a year.

In 2017 the Kazakhstan Ministry of Agriculture plans to create 220 milk receiving points (dairies?), 54 slaughter houses, and family-run feedlots for 244,000 cattle head a year.

Kazakhstan’s National Managing Holding KazAgro JSC plans to provide $186 million to finance this spring’s sowing operations.

KazAgro’s finance company, KazAgroFinance, say that $80 million will come from public funds with $106 million from other sources, so, if you fancy investing in Kazakhstan’s agricultural infrastructure, now could be your chance.

Reports are emerging that variable temperatures have led to the formation of an ice crust on Ukrainian fields which killed up to 30% of the barley crop but oddly not wheat or oilseed rape.

Ukrainian farmers have been talking about an ice crust since late December but no one I talk to is unduly concerned and winter crops are still under snow, so any reports on winter kill or estimated yields (the first USDA estimates are out later this week) is purely speculation.

The only sure fire way to assess crop condition is to go and have a look yourself once the snow thaws, or, if you don’t fancy that, you can subscribe to our Black Sea Crop Tour service and we'll do it for you.

And finally, Novosibirsk is ready for the VIII All-Russian Winter Rural Games.

The Director of the VIII All-Russian Winter Rural Games reported that all preparations are now ready for the games which will open in the city of Berdsk, Novosibirsk region on 2 March.

The program includes cross-country skiing, polyathlon, kettlebell lifting, chess, checkers, mechanics, milking and for the first time in the history of the Winter Games, mini-football.

Tuesday, 21 February 2017

Black Sea Crop Tour 2017 latest update

It’s been quiet on the Black Sea so far this week, not much to report which suits me as I am busy preparing and planning for the start of our crop touring season.

I’m keeping a close eye on the satellite images waiting for snow to clear then I’ll leave it ten days or so to give the crop time to green up as it makes observations easier rather than looking at brown fields.

In the past, weather conditions meant it was April before we started touring in earnest although I am hoping this year we will be up and running during March.

I’m not anticipating any major issues on post-winter crop condition this year as on the whole the winter has been fairly kind but there are a few regions where snow has been absent in southern Russia and Ukraine that we will want to take a closer look at and there are reports that an ice crust in Ukraine might start to do some damage if it doesn’t thaw soon.

As in previous years we will cover a representative route and call in on a few farms during the trip and I will give a running commentary with video and pictures on a subscriber’s only twitter account so you will be able to follow us in real time.

This year we are planning on making more use of videos and drones which we hope will help communicate crop condition better.

At the end of each tour I will post subscribers a written report of our findings and assessments with our predictions on what crop yields might be.

This will be our third full year of touring the Black Sea region and are grateful for all the support we have received in the past.

We are the only independent crop assessment service operating in the Black Sea region and rely entirely on subscriptions to make it happen.

If you like to support us and access our independent findings then please email me to register your interest.

Last year’s Twitter account is now open @BSCT_01 where you will be able to find videos, pictures and commentary from the 2016 season and last years full reports are also available, email me and I will forward them to you.

Thursday, 16 February 2017

Mid-week Black Sea agribusiness news

The first train load of Kazakhstan wheat has been delivered to the Far East China port of Lianyungang from where it will be shipped to Vietnam by sea.

This is the first Kazakh wheat to be delivered to Southeast Asia through China and it is estimated will take 20 days which compares favourably to wheat delivered from Australia which takes 30 days.

Kazakhstan intends to export about 500kmt of wheat to Southeast Asia through China in 2017.

Mexico and Russia have concluded a preliminary agreement on the resumption of Mexican meat deliveries to Russia according to the Mexican Agriculture Minister.

In December 2012 Russia's Veterinary and Phytosanitary service limited meat exports from Brazil, Canada, Mexico and the United States due to the content of a banned feed additive ractopamine.

Mexico said they could start delivering 400,000mt of meat to Russia in the near future.

Ukraine made had a robust presence at Europe’s largest organic trade show, Biofach, in Nuremberg, Germany this week with 15 Ukrainian companies showcasing there organic produce.

Ukraine’s Deputy Ag Minister was in attendance and noted that the Ukrainian organic farming is a relatively young sector with 400,000 hectares currently under organic production and over 200 certified producers but that exports had grown 14 times in the last two years.

Ukraine’s agricultural exports reached USD 15.2 billion in 2016 , up USD 4.0 billion on 2015 and accounted for 42% of all exports.

Agricultural imports amounted to USD 3.8 billion, leaving a positive balance of foreign trade in agricultural goods of USD 11.4 billion.

Ukraine to increase soya production, says Minister of Agriculture

Ukraine's Minister of Agriculture said Ukraine will increase in soya production.

The Minister said that soya production increased 20 times in the last ten years and 2016 was a record harvest for the crop at more than 4mmt.

Actually production increased five times and exports by six in the last ten years so on this occasion the Minister has been somewhat “over briefed”, but it is true to say production has increased as it has with all the major crops in Ukraine.

Soya is a tricky crop to grow in Ukraine, it’s more technically demanding and temperamental to weather conditions than wheat, corn or sunflower.

Getting the split application of broad leafed and grassweed herbicide timing is critical as is inoculating the seed accurately and the fertiliser regime which despite what everyone advises in Ukraine, often does need some nitrogen.

Growing GM soya alleviates the weed control option but although GM soya is grown, it is illegal and as Ukraine aligns itself closer to the EU that's more likely to become an issue than not.

Seed tends to be more expensive than other spring crops so all in all I don’t see soya production increasing significantly in Ukraine, while there is the capacity to grow more, four to five million tonnes production is probably the limit for now.

The Minister also mentioned organic soybeans as an area for development which begs the suggestion, will we start to see the production of organic GM soya in Ukraine?

Wednesday, 15 February 2017

Argentine soya plantings down 3%

Rain during late December and January in Argentina’s major soybean growing region slowed the pace of planting.

Argentine farmers had planted around 90% of the crop by early January but wet conditions stopped any further progress.

During January the primary cropping region had received up to 75% above the average rainfall and although drier weather developed by the end of the month it came too late to finish planting.

In contrast, rains largely missed the southern Buenos Aires and La Pampa region which deterred farmers there from planting into dry conditions.

The upshot of this and an increase in corn and sunflower plantings means the Argentine Ministry of Agriculture are reporting a reduction in soybean area for 2017 by more than 3% to 19.8mha.

The USDA have also lowered its 2017 forecast of soybean harvested area by 450,000ha to 19.0mha.

Although hectares are down, the crop that has been planted is reported to be in good condition so the final harvested 2017 yield might yet still be up on last year, when late season flooding led to much more crop than is usual not being harvested.

Ukraine to compensate farmers for buying Ukrainian machinery

Yesterday the Cabinet of Ministers approved the decision to compensate farmers for buying Ukrainian agricultural machinery and equipment by 15% of the value.

The announcement is light on detail but it appears that farmers who purchase Ukrainian machinery in 2017 will be compensated 15% of the value if the 35% of their machinery is locally produced.

What is referred to in the announcement as the “localisation level” which I take to mean how much locally produced equipment you own, will rise to 45% in 2018, 55% in 2019 and 60% in 2020.

The Prime Minister said "We want to maximize equipment produced from Ukrainian components” and “This will enable us to create thousands of jobs in the sector and related sectors”.

I can already see a few holes in this policy, like the price of locally produced machine rising by 15% and the shifting ownership of imported machines between companies to hit the necessary “localisation level”.

Tuesday, 14 February 2017

Latest USDA weather update for western FSU

Winter wheat remained adequately protected from bitter cold by snow cover over most of the region.

For a second consecutive week, minimum temperatures as low as -30°C across central portions of Ukraine and Russia had no detrimental impact on dormant winter wheat due to a moderate to deep snowpack (10-60 cm).

In southwestern Russia, a fresh snowfall (5-15 cm) protected winter wheat from nighttime readings as low as -20°C.

Overall, wheat continued to overwinter in good condition in Ukraine and Russia.

Latest USDA weather update for Europe

Warm, wet weather in southern Europe contrasted with dry, increasingly cold conditions in the north.

A strong area of high pressure over Scandinavia maintained dry, chilly weather (1-5°C below normal) from Germany and the Low Countries into Poland and the Baltic States.

While much of the northern Europe snowpack has melted, there were no incursions of bitter cold during the past week; consequently, dormant wheat and rapeseed continued to overwinter in satisfactory condition.

Meanwhile, a series of Atlantic storms marched east before being deflected south across the Mediterranean Sea, triggering widespread moderate to heavy rain (10-70 mm) across much of western and southern Europe.

The showers in England and France improved moisture reserves for dormant winter crops following a drier-than-normal autumn.

Farther south, the rain was beneficial for vegetative winter wheat and barley in Spain and Italy, while snow in the mountains improved spring runoff prospects for irrigated summer crops.

Does Russia have a wheat quality issue?

Russia’s Ministry of Agriculture say there is sufficient volumes of high quality milling grain.

A spokesman from the Department of agricultural markets said that he did not expect any problems with deficit of high quality milling grain in the country.

In June and July of last year I travelled the Black Sea grain growing region and reported that I had never before seen so many lodged cereal crops across Russia.

At one point I drove over 1,700km and saw lodged crops all along a route from Stavropol in the south to Moscow in the north.

It reminded me of the UK in the 1980’s when high nitrogen rates and heavy headed wheat crops fell over all the time until the likes of the HGCA started to do some research into why and more importantly, how to stop it.

Several decades later and a combination of plant breeding, growth regulators and better fertiliser recommendations made lodged crops in the UK all but a thing of the past while in Russia, low fertiliser rates, short straw and small, light ears meant you hardly ever saw it, that was until the summer of 2016.

The difference in 2016 was rain; precipitation through the stem elongation period encouraged crops to grow tall until they reached a tipping point when, encouraged by wind and rain, they just fell over.

The generally accepted result of which would to be a drop in grain quality yet all through this marketing year, like again today, the Russian Ministry of Agriculture have resolutely reported that grain quality is not an issue.

Although wheat exports have started to pick up the pace, they have been slower than expected with analysts citing low prices as the reason why farmers have been slow to let go of their stocks.

Despite the Ministry announcements, I’m starting to wonder if perhaps there might be a quality issue after all.