Russian wheat crop hit by 'quality issues' too

Russia's - large - wheat crop faces quality shortfalls too, in terms of depressed protein levels, Black Earth Farming said, as it acknowledged some turbulence from the country's political climate.

Richard Warburton, chief executive at the Russian farm operator, said that the Russian wheat harvest, while expected to show a rise of 15% in volume year on year to 57%, had shown "quite significant quality issues".

Protein levels have been about 1 percentage point lower "than prior years", a factor which has been reflected in "wide differences in prices, particularly between feed and milling wheat".

Russian prices of feed wheat have fallen by more than one-third since late June, while values of Grade 3 milling wheat have dropped by 13.5%, and Grade 4 by 22%, data from analysis group SovEcon show.

The comments come amid growing concerns over the lack of high quality wheat in the European Union too, after harvest time rains encouraged sprouting in what has also been a strong crop by volume.

'Proteins running lower'

Russia's national trend had been reflected in results for Black Earth Farming, for which the proportion of the newly completed winter wheat harvest rated as Grade 3 had fallen to 15%.

"We have seen on the wheat less Class 3 milling wheat, mostly down to proteins running lower," Mr Warburton told investors.

"Quality is lower than average, due to lower protein levels and low gluten levels."

However, the lower protein levels were viewed as an asset in spring barley, for which not only was the yield running at 3.6 tonnes per hectare, up 39% year on year, but the proportion making malting grade and earn premium prices was likely to come in at 55-65%.

'More rain needed'

The group's harvest results followed a growing season marked by cooler and "brighter" weather than normal earlier in the growing season.

The continuation of the cool weather into July had been favourable too for corn pollination, a heat-sensitive process.

However, dryness which has kicked in since May, and recent hotter conditions, were now posing a threat to corn and sunflowers, besides the potatoes grown for PepsiCo.

"We would like some more rain to make sure we get the full potential from" corn and sunflower crops, he said.

Land reforms

The comments came as Black Earth Farming unveiled a 56% drop to $5.9m in earnings for the April-to-June quarter, on revenues down 41% at $11.5m, reflected falls in both crop prices and sales volumes.

Profits were also depressed by a lower uplift from crop valuations, offset in part by other one-off factors, including a gain on asset sales and on foreign exchange.

Mr Warburton also acknowledged some threat from the Western sanctions against Russia, which appear to have hampered efforts to gain a credit facility from a major state bank.

And it highlighted some proposed land reforms which appear "anti foreign ownership and anti large scale farmers", although the measures were as yet far from becoming law.

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