Eastern Europe winter harvest yields surprise on the upside

Eastern Europe winter harvest yields surprise on the upside
The winter harvests in Eastern Europe surprised on the upside, causing grain prices to fall
By bne IntelliNews August 14, 2017

The winter harvests in Eastern Europe are all almost in and have surprised on the upside, causing wheat prices to drop in the middle of August. 

The reports come as all of Eastern Europe is reporting better than expected, if not record beating, harvests. The international grain commodity markets were hit on August 14 after the US Department of Agriculture (USDA) released a report predicting that grain production in Eastern Europe was going to be higher than forecast this year. Grain futures traded 3-5% lower on the news.

Harvests in Australia, the EU, US and Canada will all come in under par this year, the USDA says, but this shortfall will be more than made up by the bumper harvests in Eastern Europe.

Russia is on course to produce about 103mn tonnes of grain this year, down on its record 119mn tonnes of last year, but still above the five-year average. The grain yield of this year’s Russian harvest will be higher than last year’s record crop, but the overall harvest is expected to be down in terms of tonnage by 16% y/y, according to Rosstat.

The average grain yield by the beginning of August was 44.6 centners per hectare, 15.9% up on last year. Most notably, the yield of wheat was 13% higher than last year at 46.6 c/ha. In the Krasnodar Territory, 62 centners were threshed from a hectare vs 58.5 centners a year ago, according to Rosstat. According to the Federal State Statistics Service, by the beginning of August, 28.6mn tons of grain were harvested, which is 15.9% less than at the beginning of August 2016.

Ukraine is in the same position. Ukraine's grain harvest for the 2017/18 marketing year will be 60.2-63.0mn tonnes, a decline of 4.5-8.8% y/y from the bumper 66mn tonnes it brought in last year, but also above the five-year average.

Belarus is halfway in and the country is on course for a good yield this year. Half of all the area under cultivation has produced 5.4mn tonnes of grain, but the government is forecasting a total harvest of 10mn tonnes.

While the Belarusian harvest is less than half of the total the government is expecting, bad weather in May delayed the start of the harvest by up to three weeks so farmers are still playing catch-up with last year’s results.

The USDA predicts that total wheat production this year will be 743mn tonnes, or which the 12 countries of the Former Soviet Union (FSU) account for 134mn. Collectively the FSU countries have increased their forecast for production by 8.6mn tonnes.

Russia in particular beat last year’s wheat production record by 5mn to produce a total of 77mn tonnes, which accounts for three quarters of its entire grain production.  In both Russia and Ukraine winter wheat harvests are in and ahead of target.

 

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