Ukraine: The Jungle Drums Are Beating

Winter wheat normally accounts for around 90% of total wheat production in Ukraine. Plantings in are just about finished at 5.9 million hectares up to Oct 16, according to UkrAgroConsult. That's a fractional increase on the 5.8 million hectares planted at the same time last year.

Rainfall in August/September was only 25-50% of normal across much of the country, particularly the western half. That means that the 2010 crop has got off to a poor start, with only 50% of it germinated due to drought, according to Deputy Farm Minister Ivan Demchak.

Some local analysts are saying that scattered rains in the last seven days have come too late to help much of the remaining half of next year's crop. Farmers will face some tough decisions in the spring, they say. Sure, they can replant with wheat or other spring sown crops, but cash is very tight.

Limited access to bank credits, and the low level of prices for grains have already forced an increase in planting own-produced seed by 12%. A recent poll by the АPК-Inform Agency also revealed that 22% of farmers already plan not to fertilise their crops this winter.

Some analysts are already forecasting sharply lower wheat production next season, in a country that consumes around 12 MMT of wheat per annum.

Output in 2009 is pegged at around 20-21 MMT, already down around 20% on 2008's bumper 25.5 MMT. Now the Ukrainian Agribusiness Club are forecasting next season's production at only 13-14 MMT.

As recently as 2006/07 the Ukraine government was forced to introduce export restrictions on wheat after adverse weather hit production hard. With exports in the current marketing year already outstripping last season's record pace, there's unlikely to be much in the way of buffer stocks should 2010 production come in sharply lower.

Oct 1st wheat reserves stood at 13.034 MMT, say the State Statistics Committee. That is down 2.754 MMT from Sept 1st. If they carry on usage/exports at that rate then all that 13 MMT will have gone by the end of February.