A shortfall in farm investment, in the face of weak prices and tight credit, will drive grain production in the Black Sea lower for a second successive year.

Grain output in Kazakhstan, Russia and Ukraine, which together produce considerably more wheat than North America, already looks on course to slide by 6m-14m tonnes this year, analysts at UkrAgroConsult said.

And the Kiev-based group said it was expecting to lower its forecast, as poor prices and high borrowing costs sap farm finances.

"The grain crop forecasts will probably soon be adjusted due to disappointment at the current price level along with a shortage of loans and inputs," the influential group said.

Yield threats

Borrowings had fallen particularly sharply in Russia, with farmers taking out half the 189m roubles in loans taken out last year, prompting a fall in fertilizer purchases despite stable prices.

Meanwhile, considerable amounts of autumn-sown crops have been lost to a cold winter, which trapped seedlings in an ice crust for up to two months.

While much of the lost crops will be replanted, with some 1m hectares set for reseeding in Ukraine, spring cereals tend to offer significantly lower yields.

Furthermore, the late spring has prevented many farmers completing plantings of earlier-sown crops, such as barley, within the optimum window.

"In the south [of Ukraine], where the best terms of sowing early spring crops have already expired, it is better to sow corn, millet, sorghum and soy on the remaining area rather than other crops."