Ukraine farm groups flag boost from mild start to winter - as cold snap strikes

01.03.2018

Two Ukraine farm operators underlined the boost to crop condition from a mild start to winter, even as timely snow cut the threat of damage to seedlings from tumbling temperatures this week.

Kernel Holding - one of the country’s top farmers, expecting to harvest more than 560,000 hectares of crops this year – flagged “quite limited risks of losses” in winter crops after an extension last year of autumn conditions.

“Warm and snowless weather in November-December extended the winter crop vegetation period,” the sunflower oil-to-silos group said, adding that now, with the end of dormancy approaching, “a much larger share of acreage under winter crops is in the optimal conditions… compared to the same period a year ago”.

Of 108,000 hectares of winter crops, 75-85% were in “good” condition and 20-25% rated “satisfactory”, with Kernel flagging “quite limited risks of crop losses”.

‘Big positive’

Separately, smaller operator Agromino, which controls some 45,000 hectares of farmland in Ukraine, highlighted a setback from dry conditions earlier in the autumn, which meant that some of its rapeseed had “failed to establish and will be replaced in the spring”.

The group, which last year harvested 7,570 hectares of rapeseed, failed to reveal the extent of the area lost this time.

However, it added that overall its crops for harvesting this year were “in better condition than might have been expected”, thanks in a large part to the late onset of winter cold.

“A big positive has been an exceptionally warm end to [2017], which has allowed the winter crops that survived the autumn drought conditions to continue to develop for six weeks longer than would normally be expected,” said Simon Boughton, the Agromino chief executive.

“A long and mild autumn has encouraged more crop growth, which is positive.”

Deep cold

The comments come as Ukraine is bearing the brunt of the cold snap in Europe and the former Soviet Union, blamed the so-called “Beast from the East” weather front.

“Temperatures should drop between -18 to -23 degrees Celsius until Friday in most parts of Ukraine,” said Agritel.

However, the analysis group added that “the return of snow in central and eastern part of Ukraine is easing the fears of damage caused by freezing temperatures.

“In Dnipro, Cherkassy, Kirovograd and Mykolaiv regions, a snow layer of 5-15cm will now protect crops.”

Back in the black

Agromino’s comments came as the group, formerly known as Trigon Agri, unveiled earnings of E3.48m for 2017 – its first annual profit since 2012 – helped by factors including efficiency improvements, and a raised milk price at its Russian dairy operation.

Excluding one-time effects, “the real net profit from actual operations is close to E4.1m,” Mr Boughton said, adding that “in a year where commodity prices have remained low and yields [for the 2017 harvest] have not been spectacular, the result can be considered reasonably satisfactory”.

Kernel Holding reported a 30% drop to $95.4m in earnings attributable to shareholders for the October-to-December quarter, on revenues down 18.7% at $536.1m.

Earnings before interest, tax, depreciation and amortisation (ebitda) dropped 41% to $77.1m, in a decline attributed to factors including a 25% tumble in sunflower seed crushing margins to $65 per tonne of sunflower oil sold.

Kernel flagged “intense competition for sunflower seeds”, after a fall in Ukraine production last year.

‘Significant slowdown’

The group also flagged a hit from a decline in Ukrainian crop exports in 2017-18, with the country’s shipments so far in the season, which started in July, down 2.3m tonnes at 27.5m tonnes, the state service for food protection said separately on Wednesday.

The decline follows a drop in the grains harvest last year to 61.3m tonnes, down from the 2016 record of 66m tonnes.

Kernel Holding reported a 9.6% drop to 1.13m tonnes in grain volumes put through its export terminals in the October-to-December period.

For Ukraine as a whole, it reported a “significant slowdown of grain exports due to lower crop harvest and delayed harvesting campaign”.

Kernel Holding shares, which are listed in Warsaw, stood up 4.0% at 48.50 zloty in late deals. In Stockholm, Agromino shares were 1.6% lower at SEK19.00.


agrimoney

Readers choice: TOP-5 articles of the month by UkrAgroConsult