Ukraine’s 2016 wheat crop is now sailing into uncharted waters given both the significantly missed planting target and a record percentage of crops in poor condition.

 

Ukraine, the world’s sixth-largest wheat exporter, has faced one of the most challenging winter planting campaigns this year than ever before in the wake of a historic drought that set in during late summer.

 

As a result, planting progress and plant emergence has been considerably behind normal pace all along, and crop health has suffered immensely.

 

The outlook was rather gloomy as of early November, but hope still remained that Ukrainian farmers could boost winter wheat area throughout the month with help from favorable weather, which would also presumably help improve overall plant conditions.

 

But despite the seemingly supportive weather during November, crop conditions worsened throughout the month. Planting progressed in the meantime, though not significantly, but now the planting window has more or less closed.

 

This all but confirms the significant area reduction for the 2016 wheat harvest. Even with optimistic spring wheat area forecasts, the 10 percent cut in planned winter wheat area will likely lead to the smallest wheat harvest since 2012 and a consequential slash in exports.

 

GOOD WEATHER, WORSE CONDITIONS

 

As of Monday, 91 percent of the intended winter wheat area had been planted, up from 87 percent at the beginning of November.

 

Typically, winter wheat planting should conclude in the vicinity of Nov. 15. Even during the dry planting campaigns of 2011 and 2014, planting was finished close to this date.

 

Ukraine is highly unlikely to make much more progress on winter plantings, if any, since planting this late is highly risky. Seeds would have very low chances of sprouting before winter sets in for good, so the current winter wheat sown area of just over 5.6 million hectares can probably be taken as a “soft” final number.

 

Even more worrisome than the failure of the winter wheat area to hit expectations is the deterioration of crop conditions to historic lows in the second half of November, despite supportive weather and fast emergence.

 

The amount of emerged winter crops jumped from 62 percent on Nov. 16 to 80 percent on Nov. 26, likely owing to the record warm weather and plentiful rainfall during this period.

 

This percentage usually hits the mid-90s by the end of November, and the only other anomaly in recent history was the similarly dry year of 2011, when only 78 percent of winter crops had sprouted by month’s end. 

 

But despite good weather and large gains in emergence, a record-low 36 percent of emerged winter crops are in poor condition as of Nov. 26, up 5 percent from the beginning of the month.

 

Loss of area combined with the recent conditions has prompted Ukrainian agency UkrAgroConsult to lower its 2016/17 production forecast to 17.8 million tons, down nearly one-third from last year.

 

On Nov. 16, a representative from Ukraine’s agriculture ministry suggested that 2016/17 wheat exports could fall to 3.5 million tons, which would represent a drastic decline of 13 million tons from the planned export volume for 2015/16. This would drop Ukraine from the sixth-largest wheat exporting nation to the eighth largest.

 

GLIMMER OF HOPE AHEAD?

 

Aside from the warm recent temperatures, Ukraine recorded measurable precipitation every day from Nov. 7 to Nov. 28. As such, soil moisture has improved somewhat throughout November.

 

Looking ahead, the weather will likely continue to cooperate over the next couple of weeks with no deep freezes on the horizon. Rainfall frequency will be slightly less than recently, though accumulations should be at least near average.

 

Temperatures will be very favorable and well above-average through the first half of December. Low temperatures are expected to touch freezing levels only a couple of times, but otherwise, daytime highs should reach near 40 Fahrenheit (4.4 Celsius).

 

It is very likely that the warm, wet weather will continue to accelerate the emergence of winter crops, though there is no guarantee that this weather will actually help improve the conditions, as was demonstrated in November.

 

Another potentially positive factor for the 2016 Ukraine wheat harvest is the potential for increased spring wheat area, but the impact on total production might be marginal.

 

On Nov. 17, UkrAgroConsult estimated that 240,000 hectares of wheat will be planted in the spring, a 40 percent increase on the year. But the increase in spring wheat area will not offset the loss in winter wheat area, and spring wheat yields are considerably lower than those of winter wheat.

 

With the large cut to wheat area all but locked in for the 2016 harvest, wheat production will be heavily reliant on yield.

 

Combining a reasonable assumption for total harvested area with a simple trend yield, Ukraine would end up harvesting close to 21 million tons of wheat in 2016. But any weather issues in the spring might send that number below 20 million.

 

Either way, it is probably time to start preparing for sizable cut to Ukraine wheat exports in 2016/17.

 

Reuters