Ukraine groups upbeat on yields, silent on quality

Major Ukraine farm operators are announcing strong yield results from their grains harvest despite the country's political and economic unrest but it is unclear yet whether they are falling foul of quality concerns besetting the crop.

Trigon Agri, the Stockholm-listed farm operator, said that it had achieved "strong yields" in both its Russian business and the Ukraine division which accounts for the bulk of its cropping land.

At its biggest Ukraine farming centre, in Kharkov, the winter wheat yield had risen by 19% to 5.61 tonnes per hectare, a level which the group said "exceeds the national average by 50%".

While acknowledging that 2014 has been "incredibly challenging", thanks to Ukraine unrest and falling crop prices, Trigon Agri said it was "confident of a very much better financial performance" because of the "very promising outlook" from its rapeseed and wheat harvests.

The group attributed the better yield result to factors including favourable weather and "good relationship management" with trading houses, which "allowed forward sales at attractive price levels to be effected".

'Favourable weather conditions'

The comments came hours after silos-to-sunflowers group Kernel Holding, which farms on some 370,000 hectares, said that it had completed its winter wheat harvest at a yield also of 5.6 tonnes per hectare, a rise of 23% year on year.

Last week Agrokultura, listed in Stockholm, said that its winter barley harvest was finishing with yields up 49% at 5.5 tonnes per hectare, while the rapeseed harvest, then 27% completed, was showing a result above last year's 2.9 tonnes per hectare.

"Weather conditions in Ukraine have been excellent with yields recorded so far being higher than at any time in the history of the company," the group said.

Three weeks ago, poultry-to-sunflower oil group MHP said it expected yields its Ukraine grain-growing operations, on 290,000 hectares, were poised for "good" yields "significantly higher than Ukraine's average.

MHP cited "favourable weather conditions in Ukraine, operational efficiency and employment of best practice".

Quantity and quality

The comments tally with improved ideas for Ukraine grains production, which UkrAgroConsult  last week estimated at 57.4m tonnes, an upgrade of 2.1m tonnes, and in line with the 2013 result, on its figures.

However, the Ukraine wheat harvest, like that in neighbouring European Union, is expected to show an increased proportion of feed wheat, thanks to harvest time rains which, on ripe kernels, encourage sprouting and reduce milling characteristics.

ProAgro on Tuesday estimated the wheat crop at 35% of feed quality only, up from 25-30% last year.

Today, Ukraine's farm ministry estimated the share of milling wheat in the wheat harvest at 75% in southern regions, but only 45-50% in central and western areas.

The ministry said that, as of Tuesday, farmed had harvested 8.8m hectares, reaping 31.2m tonnes of grain by bunker weight.

'Period of active hostilities'

One setback Agrokultura acknowledged from the Ukraine crisis was on wage pressures, with soaring inflation, stoked by depreciation of the hryvnia, encouraging requests for pay rises.

"Wage pressure in hryvnias is high, and we are monitoring the market and what other companies are doing," the group said.

Nonetheless, although "we will have to increase wages, we expected that in dollar terms" wages will prove lower than before the currency devalued.

MHP on Tuesday also announced the temporary closure of a poultry plant in Donetsk because of the threat of violence against its staff.

"Due to the period of active hostilities at the town of Shahtarsk, Shahtarska Nova poultry farm had to temporarily suspend its operations as of August 1 for the sake of its employees' safety," MHP said, adding that it would now be forced to import some hatching eggs from the European Union.

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