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Agrokultura warns on drought harm to Russia wheat

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Agrokultura underlined the damage that dryness has caused to Russia's winter grain prospects, saying that 20% of its autumn-sown crops have "emerged in a poor state", leaving them vulnerable to frost.

The Black Sea farm operator said that the "generally dry" weather in Russia had allowed it to hike winter wheat plantings to 26,375 hectares, up 10,000 hectares from last year, when excessive rains hampered seeding.

However, the dryness has been so intense that it "will put some of the Russia wheat sowings at risk, given the limited establishment to date", the group, which is listed in Stockholm, said.

Stephen Pickup, the Agrokultura managing director said that "we are concerned by the lack of rains in the Russia Central Black Soil region" where its Russian operation is based, as are some other foreign-controlled farm businesses.

"Approximately 20% of winter seeded area has emerged in a poor state and is not well prepared to face the winter."

'Struggling to germinate'

The comments come amid growing concerns over the poor condition of the Russian winter grains crop, which has left seedlings vulnerable to cold temperatures which have already arrived.

"Heading into winter, the Russian wheat crop is struggling to germinate in unseasonably dry regions," said US broker CHS Hedging.

"There are now many thoughts that their 2015 wheat crop may not produce 50.0m tonnes."

SovEcon, which estimates this year's Russian wheat output at 58m-59m tonnes, last week flagged the potential for a sub-50m-tonne harvest next year.

'We will reseed'

Russian growers will get in the spring another shot at sowings, and may reseed areas lost to winterkill, rates of which have varied from 2.5% to 12.6%, according to SovEcon, the higher rate in 2009-10, the last time seedlings were in poor health at this time of year.

Mr Pickup said: "If required we will reseed certain areas in the spring."

However, spring grains, bar corn, typically yield less, if potentially offering quality advantages.

And sowings of spring crops potentially face a hiccup from the weak rouble, in raising costs of imported inputs such as seed and agrichemicals, SovEcon has warned.

Better performers

However, Agrokultura revealed a better start for its 25,550 acres of winter barley, rapeseed and wheat in Ukraine, up some 850 acres year on year.

"Ukrainian conditions have been good and we are pleased with the establishment of the crop," Mr Pickup said.

He also noted a jump of 16.6% in revenues from the group's Russian dairy operation in the year to the end of last month, despite a small fall in production, reflecting a drive to strip out less productive cows.

Milk prices were 33% higher in rouble terms, helped by a Russian market marked by strong demand and, recently, squeezed supplies, following the ban on ag imports from the likes of the European Union, imposed after some Western nations imposed sanctions on Russia for its alleged role in stoking Ukraine unrest.

"The pricing environment remains strong," Mr Pickup said, adding that "sanctions are likely to maintain the current pricing environment".


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