Rain arrives too late for ailing Black Sea crops; yields fall

MOSCOW/KIEV Thu Aug 23, 2012 6:27pm IST

MOSCOW/KIEV (Reuters) - Falling yields are painting an even bleaker outcome than anticipated for Russia's wheat crop, while longed-for rainfall in Ukraine and Kazakhstan won't rescue drought-hit harvests across the Black Sea area, forecasters and analysts said on Thursday.

Declining yields in Siberia and the Urals region prompted Moscow-based analyst group SovEcon to cut its Russian wheat crop forecast to 39 million metric tons from 39-41 million metric tons.

"With a sharp decline in the contributions from Siberia and the Urals, estimates for the Russian wheat harvest are falling significantly - lower, perhaps, than even the most conservative market expectations," SovEcon said in a note.

Wheat yields in Siberia and the Urals have fallen below 1 metric ton per hectare. Citing ministry data, SovEcon pinpointed yields in Chelyabinsk region at 0.6 metric tons per hectare and in Omsk region at 0.8 metric tons per hectare.

Parts of Siberia are expecting cold night-time temperatures over the next few days, as low as minus 2 degrees Celsius (28.4 degrees Fahrenheit), the Federal Hydrometeorological Centre said on its website in a weather forecast for August 23-25.

It said the possibility of wildfires remained very high in the Novosibirsk and Altai regions, despite forecast rain.

Russian Agriculture Minister Nikolai Fyodorov forecast the country's grain crop this year at the lower end of its previous range of between 75 million and 80 million metric tons, saying trends in the weather were "not very favorable."

The minister did not give a new forecast for the wheat crop. Russia had harvested about 50 million metric tons of grains as of August 23, data published on the ministry's website, www.mcx.ru, showed.

Sharply reduced crop forecasts from Russia - which harvested 94 million metric tons of grain last year, including 56.2 million metric tons of wheat - have given rise to concerns the country might once again ban exports, helping drive global prices higher.

Benchmark global corn and soybean prices hit record highs this summer in a fierce rally, sweeping wheat up with them, as the worst U.S. drought in 56 years ravaged crops.

Russia banned grain exports for almost a year after a severe drought two years ago, the catalyst for a surge in grain prices and related political instability in the import-dependent Middle East and North Africa regions.

Fyodorov, who last week ruled out such a ban, reiterated his position in an interview with state TV channel Rossiya 24.

"We are categorically against any measures which would destroy the market," he said. "We need to make very cautious moves."

RAINFALL TOO LATE

Drought during the winter sowing campaign and severe frosts in January and February hit winter grain yields in Ukraine, which fell to an average of 2.60 metric tons per hectare in 2012 from 3.06 metric tons per hectare last year.

Ukraine, targeting a 2012 grain crop of 45 million metric tons, has harvested its early grains, mostly wheat and barley.

Its wheat harvest fell to 16.3 million metric tons from 22.3 million metric tons in 2011, while the barley harvest fell to 7.2 million metric tons this year from 9.1 million metric tons.

Hot weather in July could also have damaged output of late grains, analysts said, with recent rainfall and a drop in temperature unlikely to improve crop conditions significantly.

"Following the extraordinarily hot and dry weather, the air temperature dropped by 7 to 10 degrees and rain fell everywhere," UkrAgroConsult consultancy said in a report.

It said most late crops in southern Ukraine were in poor condition, except those plantings under irrigation.

"In many areas, maize, soybean and sunflower crops are drought-stressed, have ripened prematurely and formed low yields. Part of them was even lost," the consultancy said.

Weather forecasters say hot weather is likely to return to most Ukrainian regions in the next few days, with temperatures reaching 30-32 degrees Celsius in eastern and southern regions.

Ukraine cut its maize output forecast to 20 million metric tons from an earlier 25 million metric tons due to drought. Last year, the country's maize harvest was 22.7 million metric tons.

Forecasters expect rain in Astana and the grain belt north of Kazakhstan's capital in the next few days. The Agriculture Ministry forecasts a 2012 grain crop of 13 million metric tons, less than half of last year's post-Soviet record 27 million metric tons.

The ministry said that Kazakhstan had harvested grain from 4.29 million hectares, or nearly 28 percent of the sown area, as of August 22. The country had threshed 3.1 million metric tons, with yields so far averaging only 0.73 metric tons per hectare.

Despite the lower crop, Kazakhstan expects carryover stocks from last year's record crop to permit exports of between 10 million and 12 million metric tons in the current marketing year, only slightly below the 12.1 million metric tons shipped in 2011/12.

(Additional reporting and writing by Robin Paxton in Almaty; editing by Veronica Brown and James Jukwey)

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