The dryness in southern Russia are a "major concern" for the
country's grain production prospects, Black Earth Farming said, stoking fears
for a disappointing world wheat harvest which drove prices higher again.
"Lack of rain in the south remains a major concern," Black
Earth Farming, one of Russia's biggest farm operators, said.
There were "downside risks" to early estimates of a Russian
grains harvest of 90m-95m tonnes "if the dry and hot weather in May persists".
The comments fuelled concerns over the world wheat harvest also
stoked by an official estimate that German winter wheat area making it to
harvest will fall 9.5% this year to 2.87m hectares, thanks to frost damage.
"The strongest decreases were observed for winter wheat
cultivation in Hessen, -42%, and Lower Saxony, -21%," Germany's federal
statistics office said.
'No significant rains'
Meanwhile, in Ukraine, farm experts within the official
meteorological office cut to 10m-12m tonnes, from 11m-14m tonnes last month,
their estimate for the country's wheat harvest, hurt by autumn drought,
winterkill and now a dry spring in parts too.
Some parts of Ukraine, such as Kherson and Mykolayiv, had
seen "no significant rains over the last month".
The US Department of Agriculture has estimated the harvest
at 13.0m tonnes, and the UN's Food and Agriculture Organization at 14.0m
A harvest of 10.0m tonnes would be less than half that last
year, and the second lowest in the post-Soviet era, beating only the 3.6m
tonnes reported in the freak 2003-04 season.
'Not panicking yet'
Richard Warburton, the Black Earth chief executive, added in
comments to investors that "we are entering the part of the year when rainfall
and relative rainfall in different parts of Russia become important".
But while the group's own operations, in the Black Earth
regions, were "certainly experiencing dry weather", conditions were "more
severe in the south and Ukraine".
"We would like some rain for our winter wheat crops, but we
are not panicking yet," Mr Warburton said.
Black Earth shares, which are listed in Stockholm, hit an
all-time low of SEK8.85 in early deals before recovering to close at SEK9.75, a rise of 4.8% on the day.
The group, unveiling a narrowing of 58% to $6.36m in earnings
for the January-to-March quarter, did acknowledge some setbacks from weather,
which had trimmed by 5,000 hectares to 225,000 hectares expectations for spring
"We didn't get going [on seedings] at full operational capacity
until the end of April due to the conditions," Mr Warburton said.
The company also announced the sale of 9,564 hectares of
land in Voronezh at an average of $323 per hectare.
"This was a mix of grass land not suitable for cropping as
well as some low quality arable land with high levels of chalk," Mr Warbuton