Ukraine Wheat Production Hit By Dry Spring, Credit Crunch

Dry spring growing conditions are expected to cut Ukrainian wheat production this season, says Gail Martell of StormX, with quality also an issue for the second year running.

A record wheat harvest of 25.9 million metric tons was gathered last year, but crop quality suffered in a rainy May-June ripening period. Indeed, more than half the record wheat production was downgraded to feed-quality due to mold, sprouting and other wet-weather problems. Even so, Ukraine has exported an estimated 12 million metric tons of wheat in the 2008-09 marketing season, establishing itself as major player in global wheat trade, says Gail.

May growing conditions have been much drier this year, suggesting sharply reduced wheat production.

Dry growing conditions in spring usually improve the protein content of wheat that is valued for bread making. However, due to a severe credit crunch in Ukraine farmers reportedly applied fewer fungicides and insecticides. Traders predict quality will be sub-par for the second year in a row, adds Gail.

The USDA has pegged new-crop Ukraine wheat production at 19 million metric tons on the May Supply-Demand Report and 27% less than 2008. Ukraine wheat exports were set at 6 mmt and 50% of last year.