UK winter rapeseed sowings may have been far lower than a key survey suggested, and wheat plantings higher, the owner of the Agrii agronomy chain said, also cautioning over weaker investment by Ukrainian farmers.
Origin Enterprises said that plantings of winter rapeseed, which forms the vast majority of the UK crop “are estimated to be lower by some 10% on last year, at 620,000 hectares”.
That would be the lowest in six years, and is a significantly bigger drop than the 4% forecast by a much-watched survey by the Andersons Centre released two weeks ago, although the research institute noted that “this may not be as significant a decline as many were expecting”.
The Andersons Centre acknowledged “poorer price prospects” this season than last, a trend particularly evident in the summer during the main sowing window, and flagged the “pest challenges” posed by a European Union-wide ban on controversial neonicotinoid insecticides.
And there had been some talk in the markets that the Andersons Centre figure was generous, with traders at a major European commodities house, for instance, noting that “trade sources suggest acreage might be lower”.
Rapeseed vs wheat
Origin Enterprises said that the drop in rapeseed area “is principally reflecting a combination of agronomic and rotational planning”, and with farmers turning to cereals instead.
Indeed, winter wheat sowings will hit 1.95m hectares, well above the 1.83m hectares estimated by the Andersons Centre survey – whose figure includes the small amount of wheat planted as spring crop.
On Origin Enterprises’ data, winter wheat sowings will decline by a more modest 2-3%, closer to the EU trend seen as being roughly flat.
The UK, the EU’s third-ranked producer of both wheat and rapeseed, will for the 2015 harvest see roughly the same total area of winter and spring plantings as for this year.
Ukraine vs Poland
Origin Enterprises – which owns the Agroscope agronomy business in Ukraine and Poland’s Dalgety, besides the UK-based Agrii chain – highlighted that Ukraine farmers are battling with “significant political uncertainty” which has prompted “currency weakness”.
The hryvnia has slumped by 55% so far this year against the dollar, to more than 15 hryvnia to $1, thanks to Ukraine’s unrest.
Farmers’ “crop investment spend is expected to be lower for the 2015 production year with total planted hectares forecast to be at similar levels to last year,” at about 20m hectares, Origin Enterprises said.
However, the 20145 harvest had produced good results, with “yields to date trending above average, which is providing a welcome boost to cost recovery for growers”.
In Poland, the EU’s third-ranked grower of grains overall, after France and Germany, “ideal crop drilling conditions have facilitated good progress in respect of winter plantings”.
Farmers are “well positioned to maximise on winter cereal cropping potential which is expected to be over 6m hectares”.
The comments came as Irish-based Origin Enterprises unveiled a 3.9% rise to E318.0m in revenues for the three months to November 1 although the increase was due to acquisitions.
Excluding acquisitions, revenues fell 5.6%.
The group termed the performance satisfactory, at a time when “output price volatility is making for a demanding and challenging planning environment for primary producers currently”.
Origin Enterprises restated guidance of full-year earnings of E0.60 per share, which it said was “in line with consensus” forecasts from investors.
Dublin broker Davy, restating an “outperform” rating on Origin Enterprises shares, termed the trading update “reasonable update in a challenging market for primary producers”.
That UK crop area will, overall, be broadly similar year on year is “a good outcome… in light of the current pricing environment for soft commodities”, Davy analyst Cathal Kenny said.
Origin Enterprises shares stood unchanged at 8.40 euro cents in morning deals in Dublin.
(Source – http://www.blackseagrain.net/novosti/uk-switch-out-of-rapeseed-bigger-than-thought)