Black Sea Crop Tour

Below is a report from ADM Investor Services International office in London with their Grain & Oilseeds Derivatives Broker, George Eddell. Last year he did a US Midwest Crop Tour, if you missed it, you can read it here. This year, George is in Russia doing a Black Sea Crop Tour. Learn about crops in other parts of the world here.

ADMISI Black Sea Crop Tour

ADMISI 18/19 Russian wheat production forecast: 73.63mlnt
ADMISI 18/19 Russian corn production forecast: 11.34mlnt
ADMISI 18/19 Ukrainian wheat production forecast: 24.945mlnt
ADMISI 18/19 Ukrainian corn production forecast: 25.875mlnt

Russia forecasts:

Using a combined winter and spring wheat area of 26.457mln ha (winter 14.206mlnt ha, Spring 12.250mln ha) and an average yield of 2.783mt/ha; ADMISI forecast total Russian wheat production for the 18/19 season at 73.63mlnt (USDA 68.5mlnt, IKAR 71mlnt, SovEcon 73.1mlnt).

Compared to 17/18’s record wheat crop of 84.9mlnt, 73.63mlnt represents a 13.32% drop in production due lower wheat area of 26.456mln ha vs 27.603mln ha last year (down 4.15%). Average yields of 2.783mt/ha are down 10.8% vs last year’s record of 3.12mt/ha, but slightly above the 5 year average yield of 2.59mt/ha and 5 year trend line forecast (excluding 2018’s record year of 3.11mt/ha) of 2.77mt/ha as per the below chart.

Russian Wheat Production

Individually, winter wheat production is forecast to be10.22% lower at 54.73mlnt vs last year’s 60.962mlnt, reflecting a combined reduction to plantings and yield. Taking into account the Russian Agriculture Ministry’s reported 260,000 ha reduction to winter cereal plantings and minor changes to rotations, 18/19 winter wheat plantings are forecast 3% lower at 14.206mln vs last year’s 14.645mln ha (439,000 ha reduction). Winter wheat yields of 3.85mt/ha are 8.11% lower than last year’s 4.19mt/ha but based directly upon the results and observations of last week’s ADMISI Black Sea Crop Tour (details below).

Spring wheat production is forecast at 18.620mlnt, down 22.37% from last year’s 23.986mlnt, again due to reductions in both planted area and yield forecasts. Wet weather and cool temperatures across Volga, Ural and Siberia have caused delays to sowing dates but also expected to result in some abandonment. Plantings are therefore forecasted 5.78% lower than last year at 12.25mln ha (708,000ha lower) and 5.23% lower than Russian Ag Ministry’s intended forecast of 12.926mln ha.

Note: As of the 13th June 2018 Russian Agriculture Ministry reported 11.980mln ha spring wheat planted vs intentions of 12.926mln ha compared to last year’s progress of 13.046mln ha at the same point last year.

The delayed seeding dates and cooler temperatures seen in eastern Russia are thought to have impacted the yield potential of spring wheats with yields forecasted 19.58% lower than last year at 1.52mt/ha vs 1.89mt/ha and 1.57mt/ha in 16/17.

Russia Wheat Map

Figure 2: Summary of Russian wheat production by district. Note not all districts listed.

Russian Wheat by District

18/19 Russian corn production is forecast to fall to 14.26% to 11.34mlnt due to combination of lower yields and planted acres. Plantings are forecast 3.7% lower at 2.6mln ha with yields forecasted to fall 9.23% to 4.45mt/ha vs the 5 year average of 4.94mt/ha reflecting the dry spring.

Russian Corn Production

Comments on Russian forecasts:

The ADMISI Black Sea Crop Tour found little to be concerned with in regards to Russian wheat production and concludes that observations in southern Russia were showing signs of an average wheat crop whilst conditions in central Russia indicated above average potential.

Personal views from ADMISI’s George Eddell comment ‘that there isn’t a Russian wheat story despite the news wires or picture being painted by meteorologists’, with conditions generally better than what we expected to find. ‘Impressively plants in southern Russia have held on well despite some areas not receiving any rainfall since the middle of March and current temperatures of 30 degrees’. Starting in Stavropol, wheat crops were just finishing the grain fill stage and will be starting to mature now with harvest 2 to 3 weeks away whilst winter barley harvest had already started. In some crops it was evident that dry conditions have impacted the ear formation and grain fill stage as grain numbers per ear counted an average 24 vs other wheat crops where soil moisture was higher averaging 34 grains per ear (for comparison European average grain population per ear targets 48 grains). Plant populations however were generally high showing between 400 and 600 plants square meter thanks to high seed rates drilled in this part of the world helping to maintain yield.

Comments from one particular farm director in Stavropol summed up the sentiment on the ground in Southern Russia by describing current winter wheat conditions on the traffic light system as ‘amber’ (green for good, amber for average and red for poor). His interpretation was that precipitation has been less than ideally liked with rainfall still wanted and needed. Having seen the crop get planted in ideal autumn conditions and enjoy a benign winter, this spring’s dry conditions have dented some of the initial excellent yield potential lowering expectations back to budgeted levels / average. Despite having farmed in the region for many years he was pleasantly surprised with the current conditions especially when taking into account the precipitation data and temperature anomalies.

Heading north into central Russia where temperatures were cooler we saw a notable difference in the available soil moisture with obvious signs that rainfall had been more consistent. Plant health looked richer and unsurprisingly yield potential was measured higher but also subjective observations implied a much improved outlook from what we had seen previously.

In all we traveled over 1,500km across Russia starting in Mineralnye Vody in the South, through to Kursk in central Russia. The districts of North Caucasian District, Southern District and Central District represent over 62% of total Russian wheat production giving us a boots on the ground view together with extensive yield measurements across Russia’s most influential wheat producing regions. Limitations however restricted our ability to tour eastern Russia and so therefore our crop estimates make assumptions on spring wheat potential as shown in figure 3; ‘Summary of Russian wheat production by district below.

Using the Russian Agriculture Ministry’s planting data as of the 13th June showing spring wheat hectares totalling 11.980.4mln, ADMISI forecast 18/19 spring wheat area at 12.25mln ha. Compared to the ministry’s intended area of 12.926.6mln ha and last year’s progress of 13.046.4mln ha, our forecasts expected to see 676,600 hectares abandoned with the main issues in Siberia, Ural and Volga regions. Here planting delays see farms with a remaining 10% of their intentional hectares left to plant but with the sowing window now all but over it’s unlikely that much more spring wheat will be planted. This with the knowledge that over 50% of the plantings were completed after the optimum sowing dates sees spring wheat yield forecasts down 19.58% at 1.52mt/ha.

From a political point of view it is important to note that the Ministry of Agriculture is likely to continue to report further progress of spring plantings in the coming weeks which will shadow the planting forecasts in this report. The simple reason for this is that regional governments are unlikely to allow shrinkage of sowings as this will reduce their budget allocations from the federal government’s agricultural subsidy fund. Ever since international sanctions were put into place following the annexation of Crimea, Russia’s federal government stepped up its subsidy programme to encourage agricultural production and reduce its reliance upon imported food. Some regional governments have unofficially been accused of inflating last harvests production number to justify the subsidies handed out.

Russia Corn:

Whilst winter wheat conditions we’re described as ok to good, and spring wheat conditions to the east troubled by cool weather and a prolonged winter; spring crops in southern Russia were found to be suffering from drought. Described on the traffic light scale as previously mentioned as ‘red’, with another farm director commenting that ‘the market has got it wrong regarding wheat; instead it’s the spring crops of sunflowers, corn and soybean that are at peril in Southern Russia’.

Field to field variability noticeably increased in spring crops, with later drilled fields of corn in particular suffering from the dry conditions and very low soil moistures. Rainfall is therefore desperately needed and as a result subjective observations describe conditions as poor and below average.

Taking the ministry’s planting data showing that 2.567mln ha of corn have been planted as of 13th, ADMISI forecast total corn plantings at 2.6mln ha. With most corn concentrated to southern and central Russia, yield estimates of 4.45mt/ha are based upon general sentiment and condition of crops seen by taking 10 % knock to the 5 year average yield. On the whole production in southern Russia where conditions were described as poor are largely expected to be offset by better than average corn production in central regions.

Ukraine forecasts:

18/19 Ukrainian wheat crop is forecast 4.64% lower at 24.945mlnt (USDA 26.5mlnt) vs last year’s 26.158mlnt. Planted hectares are expected to decline slightly by 1.52% to 6.264mln ha vs 6.361mln ha last year. Average wheat yields are expected to decline 3.11% to 3.98mt/ha vs 5 year average of 3.94mt/ha and 5 year trend line forecast of 4.41mt/ha.

Ukraine Wheat Production

Figure 5: Ukraine wheat production overview by region. * denotes ADMISI forecast

Ukraine Wheat Production

Ukrainian Corn:

Provisional estimates of Ukrainian corn production based off subjective crop condition assessments show marginal increases in production prospects for 18/19 at 25.875mlnt (USDA 30mlnt) vs last year’s 24.669mlnt (4.89% increase). Average yields are forecast at 5.75mt/ha vs last year’s 5.51mt/ha and the 5 year average of 6.078mt/ha.

Figure 6: Ukraine Corn production

Ukraine Corn Production

Comments on Ukraine forecasts:

As we crossed the border into Ukraine, the increased diversity of crops was firstly noticeable seeing more corn and sunflowers than the near wall to wall wheat grown in Russia. Crop conditions of winter wheat through Sumy, Poltava and into Kiev were all rated good with soil moisture evident and temperatures in the mid to low 20 degrees compared to the 30 plus degrees seen in southern Russia. Objective yield calculations from the field helped to confirm the subjective assessments that yields were measuring above average with good plant populations and grain numbers per ear.

Heading south of Kiev, winter wheat crops became more mixed with some localised dryness just south of the city and into Cherkasy, but on the whole nothing less than average, before conditions improved markedly to above average in Kirovograd. Here there was obvious evidence of recent rainfall, with Ukraine’s rich black soil full of moisture and yield measurements way above average for the region. Throughout Ukraine just like seen in Russia, poor selection of varieties and lack of investment in inputs was evident with smaller grain size and ear populations limiting yields in places where conditions would otherwise have been rated good.

Heading south into the main black sea port regions of Mykolaiv, conditions markedly changed with crops in the maturing stage and browning off. Soil moistures were much lower and yield calculations started to note lower plant populations and smaller grain populations per ear signalling stressed conditions. It was from here onwards that in Mykolaiv and Odessa that yield potential was deemed below average with crop ratings measuring 2 out of 5 and conditions generally noted below that seen in southern Russia.

In Mykolaiv we saw our first combines of the crop tour cutting winter barley. By now barley harvest will be in full swing with wheat harvest in this region expected in another 2 to 3 weeks’ time.

Across Ukraine, conditions of spring crops and in particular corn appeared less uniform and patchy compared to wheat which only showed deterioration as we headed south. Like in Russia, more questions are being asked about spring crops with varied planting dates and the application of nitrogen making for a mixed picture with the more established and earlier drilled corn faring better than crops that had been recently planted. Crop conditions of corn therefore varied from 2 up to 4 in areas where recent rainfall was evident. Similarly though to wheat, conditions were generally good from the Russian boarder through to Kiev, with some troubled spots just south of the city before excellent conditions again in Kirovograd. As we then headed south into Mykolaiv and Odessa, lower soil moistures were evident and crops were obviously showing greater signs of stress. These southern regions however are not typically Ukraine’s biggest corn areas with plantings more concentrated in north eastern areas where conditions have generally been better. It is largely because of this that subjective yield assessments show only a slight decline against average production estimates.

Ukraines Wheat and Corn Production

Starting in Stavropol in Southern Russia, we have made our way through Stavropol Krai, Krasnodar Krai, and into Rostov over the past three days. Between these three regions, they account for over 30% of Russia’s total wheat production (27.024mlnt last year) and have been the centre of speculation and concern due to the below average precipitation and dry soils as seen from the radars.

Weather Map Black Sea

World Ag Weather previous 30 day precipitation analysis as a percentage of normal and maximum temperature departure from normal.

We however have been presently surprised by the condition of winter wheat crops in Southern Russia and call for a return to average yields for this region (roughly 10 to 15% lower than last year’s record crop). We didn’t therefore see any significant or widespread signs of crop stress or drought that will result in a significant yield loss from normal.

As one farm director on a 10,000 ha enterprise neatly described it, winter wheat conditions are ‘ok to good’ with the situation described as ‘amber’ on the traffic light scale. By this, his interpretation was that it’s been drier and hotter than normal / ideal, but thanks to the excellent conditions that crops emerged from winter in, plants have held on well. This year’s winter wheat harvest in southern Russian will be by no means a disaster although from a perfectionist’s point of view; could have at one stage achieved more.

Conversely though, conditions of spring crops (corn, soybeans and sunflowers) are described on the traffic light scale as ‘red’, with evidence that current temperatures and lack of precipitation are having a negative impact. Without the autumn and winter moisture to rely on, spring crops by comparison are thought to be below average and as another farm director on a 25,000 ha enterprise put it; ‘the market has got it wrong regarding wheat as it’s the spring crops of sunflowers, corn and soybean that are at peril in Southern Russia’.

Full yield and production estimates will be put together next week once we get off the road and completed our assessments. Please therefore take this as just observations and comments for just Southern Russia, live and as we see it.

Next heading north to Kursk and then across the border into Ukraine.

Please continue to read below some notes and observations made from the field.

Stavropol

Southern Stavropol has been the driest and toughest area we’ve seen. Typically not the best growing soils of southern Russia and first field we stopped at was showing signs of crop stress with soil moisture very dry. Whilst not uncommon for this area, plant is burring off with temperatures at 30 degrees and crop like this thought to be below average and low yield of 2 mt/ha. This will be one of the first crops to be harvested in 2 weeks’ time.

Wheat 2018 Stavropol

Wheat crops improved with higher ear population counts and bigger ears helping to improve potential yields. This picture below fairly typical of 4mt / ha (average yield for area) with plants in good condition and evidence of light moisture around the root still (although not a lot). Plant in grain filling stage and thought to be 4 weeks away from harvest.

Wheat Crop Picture Stavropol

Corn by comparison struggling with virtually no soil moisture (don’t be confused by Russia’s famous black soils), evidence of soil erosion and poor soil structure from over farming.

Stavropol Corn Crop

4mt wheat southern Stavropol with soil moisture evident in the root.

Voronezh & Kursk

Heading north of Rostov we drove late into the evening to reach Voronezh, in central Russia. This was now what they called ‘black earth country’ with the soils another grade of darker and lighter substance than we had seen previously.

To no surprise, crops here were greener and at least a week or maybe two weeks behind where crops are further south. Winter wheat in Voronezh and Kursk were therefore only just reaching the grain fill stage and temperatures were notably cooler reducing the plant stress and evaporation. Soil moisture was therefore much improved and it was obvious that both Voronezh and Kursk have received recent rainfall helping to improve the crop conditions to 3 and 4 out of 5. The conditions we saw therefore confirmed the below precipitation anomaly and temperature charts over the past month.

Ag Weather Map Black Sea

World Ag Weather previous 30 day precipitation analysis as a percentage of normal and maximum temperature departure from normal.

Voronezh and Kursk Yields and Production last two seasons:

Yield Chart June 2018

In line with this, our average yield data collected across Kursk and Voronezh on winter wheats was between 4 and 4.5mt largely thanks to consistent ear populations. On the whole therefore expect harvest in these regions to be in line with 16/17 if not slightly better.

Spring Crops:

As per the winter wheat crops, spring crops of sunflowers, corn and soybeans we’re 2 weeks or so later than southern regions. Higher soil moisture and the cooler temperatures help to reduce the risks witnessed further south and on the whole spring crops said to be average and not of concern here. Still a long time to harvest though.

Tour notes and observations from the field below.

Voronezh

Famous black earth of central Russia with soil light and very forgiving. Obvious abundance of soil moisture and this crop just started grain filling stage. High plant population and lack of any disease or problems means this is an exceptional crop rated 4/5 that measured up to 6mt.

Sunflower Crop

Sunflowers with good soil moisture but likely to have been only planted within the last month or so. Usually one of the last crops to be sown.

Russia Crop June 2018

Kursk

Wheat crop belonging to the Russian Prime Minister Dmity Medvedev who also owns a very large farming enterprise in Russia. It would be unwise of me to say anything other the complimentary remarks….but it wasn’t the best. Lower plant populations and yield measurements of 3.5 to 4mt / ha.

Russian Wheat Crop

Supply of wheat seed (in that it is government controlled) and selection of varieties by farmers a big problem for Russia. This variety of wheat grows notably smaller ears which therefore reduces the yield potential. Also small population of ears assumed to be because of low seed rate and generally bad farming means yield potential of this crop poor despite having moisture available.

Russia Corn Crop

Despite seeing some very good spring crops and in particular corn, not all is good and there is some variability. This corn crop is example of this as despite the abundant soil moisture there, lack of nutrients and fertilizer is limiting potential. Farmer recently harrowed between the rows so whilst happy to spend time on a tractor (Russians renowned for over cultivating) he isn’t investing in inputs.

Russian Crop Russian Soil

Tour Route Map:

George Eddell Tour Map

Wheat Crop

Northern Stavropol now, crop maturing and 2 weeks from harvest. Yield est 4mt /ha which is average for location. Grower commented surprise at how plant has held on. Last year farm average was 5.5mt

Russia Crop

The best Sunflower crop seen across Stavropol but virtually no moisture in the soil and plants stressed with poor foliage. Crop directly drilled into wheat stubble which is unusual for Russia but reason it was one of the better crops seen as reduces soil erosion and helps retain moisture (farmers obsessed with multiple cultivations damaging soil structure).

Sunflower Crop Russia

Krasnodar – Russia’s garden of Eden

Overall more variation in crops from what observed in Stavropol with evidence of recent thunderstorms witnessed by lodged wheat in places and better soil moisture. On the whole crops in good condition and wheats will yield from 4mt to 6.5mt / ha. Morning was threatening to rain but nothing came of it.

Wheat Starvopol Russian Wheat

Spring crops that received recent rain in good condition and crop thicker and greener than corn crops in Krasnodar that have missed out. With current weather hot and dry these spring crops will continue to struggle. Below two corn pictures showing better than average crops where its assumed thunderstorms have passed judging by lodged wheat nearby.

Corn Crops Black Sea Black Sea Ag

Below picture of sunflowers in Krasnodar in area where soil moisture is much lower showing the variability in the conditions.

Sunflower Crop Europe

Rostov

Good wheat crops seen throughout Rostov with yields around 4mt level which is average and as expected for this region. Plant health and condition is good and ear populations promising with plant in grain filling stage. Evidence of moisture in the soil in wheat crops around the root.

Grain Crops Russia Soil

Same old story for spring crops with the lack of recent rainfall, over cultivation and exposed soils seeing very little soil moisture. Below is a picture of corn plant roots showing dry conditions.

Corn Roots

Tour Route Map:

Tour Map

Ukraine

Crop conditions in Ukraine have not-surprisingly mirrored a similar pattern to what we witnessed in central and southern Russia. As we crossed the border, winter wheat crops in northern and central regions of Sumy, Poltava, Kiev and Kirovohrad were all thought to be above average conditions and in the grain filling stage. Yield calculations taken from the field also suggesting above average potential. The picture changed for wheat however as we reached southern Ukraine and into Mykolaiv with plant development advancing to the maturing stage and starting to burn off. From this point onwards, soil moistures were notably drier and yields appeared to measure below average with crop ratings also down at 2 to 3 out of 5. Southern Ukraine therefore seems below that of the conditions and potential witnessed in southern Russia with harvest fast approaching and expected to start in a week or so time.

Spring crops were more of a mixed bag across Ukraine. On the initial leg to Kiev, crops of corn, sunflowers and soybeans were further behind and poorly established despite there being good soil moisture available, It is thought that this is partly due to later plantings and in some instances lack of nitrogen resulting in below average conditions of 2 to 3 out of 5. Conditions though improved south of Kiev into central Ukraine where sunflowers and corn in particular were thriving and rated 4 out of 5. Here the diversity of cropping increased with both winter and some limited spring rapeseed was seen as well as spring barley that was all rated well. Conditions though deteriorated as we headed south into Mykolaiv where soil moisture turned notably drier and crop ratings fell to 2 out of 5. Echoing the traffic light description given to southern Russia, spring crops in southern Ukraine are described as ‘red’ warning with rains desperately needed.

Weather Map

World Ag Weather previous 30 day precipitation analysis as a percentage of normal and maximum temperature departure from normal.

Tour notes and observations from the field below. Full report and write up to follow once back in the office.

Sumy

Ukraine’s black earth with plenty of soil moisture, crop in excellent condition and above average yield potential of 6mt/ha. Wheat ear taken from a second sample in Sumy with crop rating of 4 out of 5 and thought above average yield potential.

Crop Soil and Wheat Crop

Later planted corn in earlier stages of development looking like it needs nitrogen. Plenty of soil moisture available.

june 2018 corn crop

GM Soybeans? Growing GM crops in Ukraine is not approved and it is illegal. Zero weeds and what appears to be glyphosate spillage on the track between the two fields where they likely filled up the sprayer suggests this is roundup-ready GM soybeans.

Soybean Crop

Cherkasy

Corn south of Kiev in Cherkasy in very good condition.

Corn Cherkasy

Kirovohrad

4 out of 5 crop rating but would benefit from rain. Yield estimated 4.5mt/ha but could have been better if plant population higher.

Black Sea Crops

Excellent corn crop with soil very warm and full of moisture with evidence of recent rainfall.

Corn Crop Europe

Mykolaiv

Wheat crops suddenly maturing and turning brown in Mykolaiv. Solid very dry and yield potential dropped to 3mt/ha.

Wheat Crop Ukraine

Ukrainian flag: Fields of gold and skies of blue.

Ukraine Farm

Winter barley harvest started in southern Ukraine.

Barley Crop Ukraine Barley Crop Ukraine

Non-tilled / direct drilled sunflowers struggling with very dry soils and 30 degrees heat.

Sunflower Crop Ukraine

Tour Route Map:

George Eddell Map

The information conveyed by ADMIS or its affiliates to the audience is intended to be instructional and is not intended to direct marketing, hedging or pricing strategy or to guaranty or predict future events, including the pricing and pricing movements of commodities and commodity futures contracts.

2018-06-18T20:48:11+00:00 June 18th, 2018|