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Trigon Agri counts cost of Ukraine drought, Russia land deal

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Trigon Agri revealed its crops had fallen victim to poor Ukraine weather as it confirmed the dent to its results from a Russian land sale, unveiling its biggest ever quarterly loss.

The former Soviet Union farm operator, which is listed in Stockholm, said that inundations in Ukraine in early July, besides the well-publicised drought, had "delayed and hurt" its early harvest in the country.

However, the bigger impact was from the country's well-publicised drought, with the weather turning "dry and very hot" after the July precipitation, "with no significant rain for about three months".

While the group achieved "respectable" results in sunflowers and soybeans in Ukraine, the "prolonged drought affected maize yields quite dramatically", seeing them drop 13.0% year on year to 6.52 tonnes per hectare, the company's weakest result for corn since at least 2010.

'Among worst ever recorded'

The dryness had also got autumn-sown seedlings off to a poor start, Trigon Agri said, giving tangible evidence of the dryness damage which has prompted expectations of a sharp drop in Ukraine's 2016 harvest of winter crops.

Market talk is of a Ukraine harvest of wheat, which is nearly all autumn sown, of 14m-18m tonnes next year, down from 27m tonnes this year on US Department of Agriculture estimates.

UkrAgroConsult has pegged the 2016 wheat crop at 17.5m tonnes, saying that "acreage has decreased to its lowest level over the last 10 years.

"The situation is complicated by the fact that germination and conditions of crops are among the worst ever recorded."

'Very weak condition'

Trigon Agri said that "the drought meant that our winter crops [in Ukraine] did not germinate. This again has led to the need to reseed a significant part of our fields prepared for inter wheat and rapeseed in spring.

"No appreciable rainfall in three months with the first rains arriving in mid-November has resulted in very weak crop development.

"The rape crop has also suffered from both drought and unseasonal frosts in October and is in a very weak condition."

The group forecast a "higher than average loss of winter crops", but added that it had been "proactive" in sourcing seed for spring-seeded crops, which are likely to particularly popular in Ukraine this year, given the setback to autumn plantings.

UkrAgroConsult has forecast a rise of 2.8m tonnes, to 25.8m tonnes, in Ukraine's corn harvest next year thanks to the increased popularity of spring sowings, with soybean output seen soaring 30% to 4.92m tonnes.

Farmland sale

However, it was a dent from the E25m sale of some of the group's Russian farmland that Trigon Agri blamed for the widening to E36.6m in losses for the July-to-September period – by far the group's biggest quarterly loss on records going back to 2008.

The disposal, amid a drive to bolster Trigon Agri's balance sheet, included E14.5m for farmland and buildings, well below the figure of E57.3m at which the assets were held in the company's accounts.

The company, which sold the Russian land to Cypriot-based Ellania Business, said that it was "in negotiations on selling the two other remaining non-core assets as well and hopes to be able to report on this as soon as possible".

Trigon Agri said that its loss from continuing operations amounted to E3.05m, compared with a E5.30m loss a year before.

The group's shares stood down 4.5% at SEK0.535 in lunchtime deals.


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