Romanian farmers have, nearly, made up in spring sowings what they lost in autumn plantings to dryness, Origin Enterprises said, backing ideas that the country will retain its newly-won title of top European Union corn producer.
The agronomy group, whose empire stretches from Ukraine to Brazil, highlighted the “challenging operating conditions for farmers and growers” in Romania, after “sustained dry conditions” late in 2019 “significantly reduced autumn and winter oilseed and cereal crop establishment”.
Sowings of soft wheat by Romania – a leading exporter of the grain to top importer Egypt – for this year’s harvest fell by 9.4% to 1.91m hectares, the lowest in 16 years, according to European Commission data.
Rapeseed sowings plunged by 23% to 486,000 hectares.
However, “the reduction in autumn and winter plantings has been largely offset by higher spring cropping”, Origin Enterprises said, pegging Romania’s total cropping area down 1% year on year at 8.2m hectares.
The estimate backs ideas of a rise in spring crop plantings, of which corn is a key option for Romanian growers, who last year – helped by a bumper yield of 7.79 tonnes per hectare - became the European Union’s top growers of the grain for the first time, overtaking France.
The European Commission estimates Romanian corn sowings up 3.7% year on year at 2.51m hectares, although some commentators have talked of potentially a bigger increase.
‘In good shape’
The commission forecasts the Romanian corn harvest declining this year to 15.50m tonnes, with a weaker yield more than making up for increased acreage, although is still above the 13.45m tonnes expected for France.
However, this forecast was made before the EU’s Mars agro-meteorology division this week upgraded its Romanian yield estimate for 2019 by 0.40 tonnes per hectare, to 6.77 tonnes per hectare – still down year on year, but above the five-year average of 5.18 tonnes per hectare.
Spring-planted crops “are in good shape in the main producing regions”, Mars said, noting that since the start of May “abundant rainfall kept soil moisture levels above average levels.
“Current soil moisture contents provide a promising start to this summer” for spring-seeded crops.
Origin Enterprises’ comments came as it unveiled revenues of E595.4m for the February-to-April quarter, up 11.4% at an underlying level.
In Continental Europe, underlying revenues fell by 1.6% to E157.9m, “impacted by challenging operating conditions across” the region, “and in particular a highly competitive trading backdrop in Ukraine”.
In Ukraine, “business performance reflected a market characterised by lower liquidity and excess inventories, resulting in highly competitive trading conditions”, the group said, forecasting a drop in margins and profits at its Continental Europe division for the full financial year.
However, the Ireland and UK division reported an 18.05 gain to E405.5m in underlying revenues, helped in part by the knock-on impact on farmer demand from improved weather conditions this year, but also from the dent to sterling from the Brexit saga.
“Favourable operating conditions on-farm together with the positive impact of sterling depreciation on growers’ crop margins resulted in good demand for agronomy services and inputs.”
Origin also highlighted that “agronomy service revenue and crop protection volumes grew by over 30% in the third [February-to-April] quarter against the prior year,” when dryness curtailed demand.
The Irish-based group said that it had seen a “positive start to trading” in its current, fourth quarter, with the company on track to achieve full year earnings of 51.5-52.5 euro cents per share.
“Strong performances for Ireland & UK and Latin America in the nine-month period have more than offset the impact of challenging operating conditions in Continental Europe.”
Origin Enterprises shares rose by 2.3% to E5.46 in lunchtime deals in Dublin.