Agrokultura cuts wheat for sunflowers, after rains

Agrokultura has sown more sunflowers than wheat, as it sought to make up in spring plantings for the poor autumn sowing conditions in the former Soviet Union which hampered seedings of winter crops.

The farm operator in Russia and Ukraine highlighted that sunflowers had become "the most significant group crop in terms of hectarage", with sowings rising by 20% to 29.3m hectares.

The increase contrasts with a 40% tumble to 24.4m hectares in winter wheat sowings, reflecting in part the sale of land in Kaliningrad, where 1,900 hectares of winter wheat was sown for the 2013 harvest.

However, it is also down the wet autumn which forced many former Soviet Union farmers to abandon until spring many acres which had been earmarked for winter grains.

Peer experience

Indeed, Russia-based peer Black Earth Farming also highlighted the "challenging winter crop planting conditions" by revealing last month that it has hiked sowings of sunflowers too, by 28% to 37,233 hectares.

By contrast, seedings of winter wheat, usually the group's most widely-sown crop, tumbled by 59% to 30,207 hectares.

Black Earth Farming - which sells sunflower seed, along with potatoes, to Frito-Lay, the PepsiCo-owned snacks manufacturer also raised sowings of corn by 52% to 55,822 hectares although it eased back on seedings of some other spring crops.

In rapeseed, spring sowings dropped by 44% to 17,717 hectares, and in barley by 24% to 16,712 hectares, contrasting with ideas that spring plantings of the grain overall will rise in the former Soviet Union, thanks to its relatively low need for imported inputs.

National prospects

Weakness in the rouble and the hryvnia has made bought-in seeds and agrichemicals more expensive for foreign farmers also negotiating, in Ukraine especially, tricky credit conditions.

In Russia too, where "banks are worried by farmers' high indebtedness and the growth of delinquent loans", financing for farmer was, at 75bn roubles as of mid-May, equivalent to about $2bn, running some 11% behind that a year ago, US Department of Agriculture foreign officials reported.

Indeed, the USDA officials believe that, largely thanks to the expense of importing high-class seed from the likes of the US, Russian production of sunflower seed will fall by 1.0m tonnes to 9.5m tonnes this year, on a similar planted area.

They see Ukraine production falling by 1.6m tonnes to 10.5m tonnes, factoring in "the overall economic situation in the country prior to and at the time of the spring planting this year.

"Producers are not expected to maximize sunflower yields," the USDA's Kiev bureau said.

"They are rather expected to reduce costs by either purchasing cheaper inputs or making fewer chemical applications and in general modifying production technology to cut down production expenses."

'Among the most profitable crops'

A fall in sunflower seed production would contrast with a growing crush capacity in Ukraine, where Kernel Holding last week flagged the impact of a strong 2013 harvest in boosting its processing margins, by undermining raw material prices and allowing it run plants closer to full capacity.

For producers, Agrokultura chief exective Stephen Pickup said that "over recent years, [sunflowers have] been among the most profitable crops, with relatively low costs and good pricing driven by the general oilseed market".

Agrokultura pegged its overall planted area at 119,200 hectares, down 15,200 hectares year on year, of which some 8,000 was down to the sale of the Kaliningrad farms.

The group also lost some ground to a wet finish to the Ukraine spring sowing campaign, but is also, like Black Earth Farming, switching to a strategy of focusing on its most profitable land.

The group said that all its spring crops had been "sown into an excellent seedbed and have had good weather conditions to emerge strongly", echoing comments from Kernel and Trigon Agri last week over the health of their crops.

Agrokultura shares, which are listed in Stockholm, eased 0.3% to SEK2.90 in morning deals.

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