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