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Rain needed for Romanian grains, but excessive in parts of UK

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Origin Enterprises flagged a need for rainfall in Romania, and disease risks in the UK, represent among the few threat to crops within its European Union footprint, saying Ukraine spring sowings would make up for a poor autumn campaign too.

The owner of chains including Agrii in Poland and the UK, and Comfert in Romania, said that its agronomists were seeing largely benign growing conditions, with for instance in Poland "generally favourable weather supporting good crop development".

However, in the UK, while "conditions for crop establishment and growth were generally excellent" in winter, "largely to due above-average temperatures", record rainfall across much of the country during December and January has caused some hangover.

Origin Enterprises noted "current weather effects of, among others, higher disease levels in crops, saturated soils and nutrient deficiencies", with high rainfall levels encouraging leaching of fertilizers.

'Intense drought'

And in Romania, while "crop establishment over the autumn and winter period has been favourable", the group noted "the impact of unseasonably high temperatures on soil condition" following "intense" drought earlier last year.

Although current conditions are "conducive" to crop development, the group highlighted moisture needs for crops in Romania, a key EU wheat exporter to, for example, Egypt.

"Normal rainfall during the early growing season will become an increasingly improved requirement in maximising the area, and the potential, of spring crops in particular," Origin Enterprises said.

Area estimates

The group also noted strong autumn crop sowings in Romania, pegged at 3.9m hectares, a rise of 6.8% year on year, although the increase will be in part offset by lower spring sowings.

Romania's overall cropping area for the 2016 harvest was forecast increasing by 2.0% to 7.4m hectares.

However, overall crop area in Poland, the EU's third-ranked grains producer, will drop by 1.7% to 10.12m hectares, depressed by a 2.3% drop in autumn and winter plantings.

And area in the fourth-ranked UK, was forecast declining by 1.6% to 4.29m hectares, led by a 3.6% dip in spring sowings.

The UK's key winter wheat crop, a source of feed grain exported to the likes of Spain besides used in England's two large bioethanol plants, was seen as having been seeded over 1.9m hectares –a rise of 2.5% year on year.

The data compare with an estimate earlier this week from the AHDB bureau which showed winter wheat plantings in England and Wales, responsible for the vast majority of UK output, at 1.66m hectares, a 1.8% decline year on year.

Spring vs winter crop

Beyond the EU, Origin Enterprises forecast Ukrainian farmers sowing 20.5m hectares with grains for the 2016 harvest, "equivalent to" the area last season, despite drought and high temperatures which limited autumn seedings.

Indeed, Ukrainian sowings of winter crops are, at 5.8m hectares, some 30% below typical levels.

However, growers are adopting plans "to extend winter planting where weather and soil conditions allow, along with a switch to increased spring plantings".

Into the red

The comments came as Origin Enterprises revealed an underlying loss of E3.11m for the August-to-January half, compared with earnings of E7.30m a year before, on revenues down 4.6% at E507.2m.

The decline reflected weaker volumes and prices of the fertilizers and agrichemicals sold by its farm retail operations, and lower takings from agronomy services too, as weak crop prices prompt growers to curtail spending.

However, the group stuck by expectations that its underlying full year earnings would come in at about E0.51-0.53 per share, a move termed a "positive surprise" by broker Davy.

"We harboured concerns that the recent weakness of sterling and the ongoing challenging trading backdrop might pressurise guidance," the Dublin-based broker said.

Shares in Origin Enterprises stood flat at E6.60 in lunchtime deals in Dublin.

By Mike Verdin

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