Drought has cost Ukraine its hopes of its best corn harvest since at least the 1980s, with the crop set to fall year on year despite a jump in sowings, the head of agribusiness giant Kernel has warned.

Andrey Verevskyy, the chairman of the sunflowers-to-silos group, said that there was "little doubt" that the corn crop in Ukraine, the biggest exporter of the grain outside the Americas, had "suffered from the recent heatwave".

"Out forecast for corn production this year is, therefore, at best 10m tonnes."

The estimate is lower than the latest, reduced, estimate of 11.5m tonnes from the US Department of Agriculture, whose data set the global benchmark.

Indeed, many analysts have hoped that autumn-harvested crops might avoid the drought damage which affected wheat and rapeseed.

Huge soil cracks

UkrAgroConsult, the Kiev-based analysis group, two weeks ago pegged the harvest at 11.7m tonnes.

While early-planted corn was in "excellent" condition, overall "moisture shortages and heat during the grain-filling period contributed to premature ripening of corn", UkrAgroConsult analysts said.

"Cobs are insufficiently filled and have incomplete grain content," they added, citing dry weather which in Kirovohrad, in central Ukraine, had created soil cracks "large enough to stick a hand into them".

Kernel said that it was sticking by a forecast of 17m tonnes of wheat, with the barley crop estimated at 9m tonnes, in line with UkrAgroConsult's latest forecast, and the rapeseed harvest at 1.5m tonnes.

Quota impact on exports 

Mr Verevskyy added that Kernel was slashing it estimate for grain exports for its 2011 year, which started last month, by 44% to 1.3m tonnes thanks to the export quotas which Ukraine is widely expected to introduce, despite twice postponing a decision.

Such a margin increase would "more than compensate [for] the shortfall in grain volumes handled and exported," Mr Verevskyy said.

Indeed, the group forecast a just to $1.3bn in revenues in its 2011 financial year, with earnings pegged at $195m

Acquisition help

The comments came as Kernel reported earnings for the year ending June 30 at $153.0m, on revenues of $1.02bn.

In the April-to-June quarter, earnings rose 41% to $30.5m, on revenues up 32% at $238.5m, helped by the acquisition of sunflower oil group Allseeds and by capacity increases.

Kernel shares stood 0.7% lower at 61.35 zloty in late trade in Warsaw.