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Black Sea sees jump in grain crop, allowing export

Published 03/25/2011, 06:40 AM
Updated 03/25/2011, 06:44 AM

*Russia, Ukraine to boost grain harvest

*Late spring may cut grain yield

*Black Sea grain to return to the market

By Pavel Polityuk and Aleksandras Budrys

KIEV/MOSCOW, March 25 (Reuters) - Farmers in the leading grain-producing areas of Ukraine and Russia will start mass sowing in a few days and predict a rise in the 2011 grain harvest and a return to the lucrative export market.

But analysts and officials are now saying the increase may not be as large as predicted a few months ago.

A severe drought last summer left Russia without a third of its 2010 grain harvest, while Ukraine lost about 15 percent of grain crop compared to 2009.

Russia, formerly among world's leading exporters of wheat, banned grain sales for the 2010/11 season, while Ukraine, which used to be the world's major exporter of barley and a leading exporter of wheat and maize, imposed grain export quotas.

A snowy winter without extreme frost across the region has allowed Russian farmers to forecast a jump in the harvest to about 86-87 million tonnes from 60.9 million in 2010, but poor spring weather could cut the harvest to as low as 76 million.

In Ukraine, which used to forecast a jump in grain production to about 46 million tonnes this year from 39.2 million in 2010, the grain crop could rise to about 44 million or even to 41 million if the spring appears to be dry.

RUSSIA

The Russian Grain Union, the top agrarian lobby, said it expected overall grain harvest to reach 86 million tonnes this year, up from 60.9 million tonnes in 2010, while a worst-case scenario would result in a 76 million tonne crop.

"If we add up all the risks, the harvest could decline by 9.9 million tonnes from the expected plan," the union's president Arkady Zlochevsky said.

Zlochevsky said that weather-related risks included the effect of late spring sowing, which has been delayed by about three weeks due to cold weather, as well as another drought.

A delay in sowing could lead to a fall in the harvest if the best window of opportunity for the campaign is missed, which could result in lower yields.

Russian Deputy Prime Minister Viktor Zubkovin said earlier this month that the government had lowered its forecast for this year's grain crop to 84-85 million tonnes from a previously expected 85-87 million.

SovEcon analysts said earlier this week the crop could range between 75-85 million tonnes this year.

The bigger harvest will allow Russia, where grain consumption totals 72-74 million tonnes, to return to export markets later this year.

The government has imposed a grain export ban to July 1, following a devastating drought that wiped out one third of the crop last summer.

But Agriculture Minister Yelena Skrynnik told journalists on Friday that officials would consider lifting the grain export ban after the size of this year's harvest is known in late September or October.

"We will have to wait for the results of the spring sowing and to have an understanding of the new crop," she said. "We will have that only at the end of September or October."

UKRAINE

Ukraine, which had been forced to limit its grain shipments after Russia's export ban, plans for an increase in the grain harvest to 41-46.5 million tonnes this year, saying that weather in April and May will be critical.

"Final results will depend on weather in April-May. A dry April and May would mean that the harvest will not reach its maximum possible level," a large foreign trader said.

"As of today, we forecast the harvest of about 46.5 million tonnes, including 21 million of wheat," the trader said.

Top Ukraine analyst UkrAgroConsult has been forecasting this year's crop at 46.2 million tonnes but is likely to revise the outlook lower.

"We are considering revising the forecast to about 44 million tonnes. Winter crops are not as perfect as we had expected before," said Elizaveta Malysh from UkrAgroConsult.

She said winter crops were better than a year ago but that a delay in sowing could reduce the yield of spring grains.

Less optimistic Ukrainian officials have said the harvest could rise slightly to 41-42 million tonnes.

The Farm Ministry predicted output of 42 million tonnes, while Ukraine's Central Bank said in its macroeconomic report that the crop could total 41 million tonnes this year.

Ukraine consumes about 26 million tonnes of grain a year.

(Editing by Jane Baird)

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