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Agromino says crops make 'reasonable' start, amid debate on Ukraine's 2018 prospects

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Shares in Agromino reversed sharply as the Ukraine farm operator flagged some setback from Ukraine’s dryness to crops, as it cautioned that its full-year results “will be below our earlier expectations”.


Shares in the group, which is listed in Stockholm, plunged 8.0% to SEK18.40 in early deals, reversing gains made earlier in the week.


The retreat followed the release of results in which Agromino chief executive Simon Boughton, a former boss at UK-based farm management group Velcourt, highlighted the test posed by dryness both to late-harvested 2017 crops, and the winter wheat and rapeseed planted for 2018.


Soybean, corn and sunflower crops, “which must grow through August, all have had yields reduced by the prolonged drought that started in late July and was only really relieved by a rainfall period in the last week of October,” Mr Boughton said.


Yield declines


“In common with much of central, east, and south east Ukraine particularly affected have been soya and maize [corn], with sunflower reduced but by not such a degree,” he said.


Corn yields fell by 36% year on year to 5.31 tonnes per hectare, and those of soybeans by 60% to 1.0 tonnes per hectare, Agromino said, in a report which follows setbacks reported by some other operators too.


MHP - the chicken-to-grains giant whose arable operations span some 360,000 hectares - two weeks ago that “unfavourable weather conditions have led to lower yields across all crops compared to preliminary forecasts and expectations”, although its results remained ahead of Agromino’s figures.


Outlook for 2018 crops


Furthermore, Agromino revealed a somewhat mixed start to crops seeded for the 2018 harvest, reporting some “strong” winter wheat following on from rapeseed and pea crops, but some late germination.


Autumn-seeded rapeseed was “for the most part well-established and is ready to face the winter conditions”, Mr Boughton said.


The group rated its 2018 crops overall as being “in reasonable condition”, in comments which come amid a broader debate over Ukraine’s winter grains.


UkrAgroConsult two weeks ago said that crops are in better condition than a year ago, and that "topsoil moisture content is higher”, while Lanworth said that “above-normal precipitation in October and early November in [dry] areas has supplemented upper soil moisture”.


However, Ukraine’s farm ministry on Tuesday reported winter grains sowings, at 6.9m hectares, ending up 300,000 hectares shy of expectations, in a shortfall attributed by commentators by a reluctance by farmers to sow into dry soils.


The ministry rated at 82% the proportion of crops in good or satisfactory condition.


‘Below our expectations’


Agromino reported earnings of E6.56m for the January-to-September period, returning to the black after a E23.3m loss in the same period last year.


Nonetheless, flagging setbacks from factors including the reduced autumn-harvest yields, and a E1.4m writedown on default over a fertilizer order, the group said that its “2017 operational result will be below both our earlier expectations and the business’s real potential”.


Nonetheless, given that the group, formerly known as Trigon Agri, “is still in the restructuring stage” after a shake-up which involved a debt restructuring, “the overall position is definitely a dramatic improvement from the past”, Mr Boughton said.

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