Drought adds to Ukraine farmers' headaches

Dry weather is adding to problems for Ukraine farmers, prompting a downgrade of wheat production prospects, besides a warning over the impact of civil unrest on their spring sowings programme.

Ukraine's winter wheat crop, which accounts for the vast majority of its production of the grain, faces "severe drought", which may prove "very difficult to overcome" for seedlings even with rains in the spring, Gail Martell at Martell Crop Projections warned.

"Drought in central and eastern Ukraine has grown worse fall into winter," Ms Martell said, estimating that these areas have received 30-50% of normal precipitation over the past four months.

This after "wheat was not well established last fall due to very dry field conditions".

'Near-record low moisture'

The concerns were echoed by US-based analysis group Lanworth, which ditched expectations for Ukraine raising wheat production this year, downgrading its forecast for the 2014 crop by 700,000 tonnes to 21.2m tonnes.

"February precipitation stands 50-55% below normal, continuing a trend since October," said Lanworth, which relies heavily for satellite technology for its estimates.

"Near-record low moisture continues to increase the risk for extreme losses should warm and dry weather continue through the May-June."

Ukraine, the sixth largest wheat exporter, reaped a 21.6m-tonne harvest of the grain last year, on Lanworth estimates.

'Shipments increasingly difficult'

The warnings came amid growing talk of disruption to Ukraine grain exports from civil unrest, with Ihor Shvaika, the Ukraine agriculture minister warning that foreign merchants are not placing fresh orders for crops.

Meanwhile, on the supply side, growers are becoming reluctant to sell crops they see as a, dollar-denominated, hedge against a falling hryvnia, which stands near a record low against the greenback.

"Ports are open and vessels are loading but shipments are becoming increasingly difficult," said Cary Sifferath, regional director for the US Grains Council.

"We're seeing farmers holding grain to hedge against a devaluing currency."

Agritel, the Paris-based analysis group with a Ukraine office, said that merchants were having to "revise up their bid prices to producers to encourage them to sell".

'Opportunities for rivals'

The council also warned over the potential impact on Ukraine's spring sowings programme as unrest disrupts farmers' access to loans and state support programmes.

"The economic instability will affect Ukrainian farmers looking to plant this year's crop," it said, adding that "Ukraine is in a tough spot financially, and planting season is just around the corner".

However, the council, which promotes US grain exports, highlighted the boost from the instability to Ukraine's rivals in grain markets.

"We hope for a peaceful and speedy resolution of Ukraine's crisis, but the instability is creating opportunities for additional US exports to North Africa, the Middle East, and China," Mr Sifferath said.

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