Tuesday, 28 March 2017

Latest USDA weather update for western FSU

Unseasonable warmth lingered over much of the region, with well-placed showers maintaining good to excellent early-season prospects for winter wheat in Russia.

This week’s temperatures averaged 4 to 7°C above normal, continuing a warm trend which began in mid-February; consequently, winter wheat - which broke dormancy up to a month ahead of normal - continued to develop at an accelerated pace.

Precipitation during the period totalled 10 to 30 mm over western Russia, boosting moisture supplies for key wheat-producing areas in southern portions of the Southern District (Krasnodar Krai).

In Ukraine, similar rainfall totals maintained good soil moisture for winter wheat in eastern portions of the country, while light rain (5 mm or less) did little to ease concerns over short-term dryness (25-50 percent of normal over the past 60 days) in central and southern wheat areas.

Latest USDA weather update for Europe

Periods of rain maintained or improved prospects for winter grains and oilseeds over much of the continent.

Across central and eastern Europe, a series of fast-moving disturbances produced widespread showers (5-30 mm) in Germany, Poland, and the northern Balkans.

Consequently, moisture reserves remained adequate to abundant for vegetative winter wheat and rapeseed following near- to above-normal precipitation over the past 60 days.

Despite the occasionally wet weather, temperatures 3 to 5°C above normal (up to 8°C above normal in southeastern Europe) continued to promote faster-than normal crop development.

Farther west, late-week rain improved prospects for reproductive winter grains in Spain (5- 20 mm) and boosted moisture supplies for vegetative wheat and rapeseed in France (10-40 mm, locally more).

The western storminess was accompanied by cooler weather (nighttime readings near or below 0°C), with wet snow reported in parts of Spain.

However, the cold did not have any impact on wheat, barley, or rapeseed.

Unsettled weather (5-25 mm) was also observed in southeastern England, sustaining favorable soil moisture for winter crops.

Dry conditions prevailed over the Mediterranean Coastal areas, promoting citrus harvesting and other seasonal fieldwork.

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 blackseacroptour@gmail.com 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.