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.
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.
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.