To a large extent, much of the unwarranted panic that followed was fueled by speculations that losses are huge in Ukraine and Russia, and that both governments may ban grain exports, even as global grain stocks remained very high.
I look at the weather maps in the first week of August, I am really scared.
While some grain export restrictions – mostly of an informal nature – were reported, flat out export bans did not materialize. Moreover, Ukraine’s harvest was less affected by the heat wave, more by ample rains. The reality is that by the time the heat hit Ukraine, we lost a lot of early grains to the rainy weather. It has also affected the quality of grains, which was a lower than usual in the southern regions and better than usual in central regions.
Now, however, as I look at the weather maps in the first week of August, I am really scared.
I am not worried about wheat being scorched in the heat wave. It is a great weather for wheat, which has already basically been harvested.
It is not bread where Ukrainians may lose money – it is veggies, which are an essential part of Ukrainians’ diet.
Rather, I am worried about crops still in the field. With nominal temperatures of 40-42 degrees C, ground temperatures will be close to 60 degrees C or more. A lot of late veggies may not make it. It is not bread where Ukrainians may lose money – it is veggies, which are an essential part of Ukrainians’ diet. We may also have to reduce sunflower seed, corn and soybean production forecasts, which are essential export revenue generators.
Our initial forecasts for vegetable production were very good. In fact they were too good and would have equated to very low prices for farmers. Now we are reducing it every day and we are afraid that the products will be of poor quality, which would make it difficult to store them.
Western Ukraine suffered from ample precipitation and cool weather in the first half of summer. Central and eastern parts are now suffering from heat. It is funny that Crimea is the coolest place in Ukraine, although warmer than western regions of the country.
We are still thinking that the harvest will be sufficient for the domestic needs, but we already see that Russia will have a great shortage of vegetables and Poland has lost a significant amount of its harvest. Thus, our grain prices are likely to be higher than we initially thought, although still lower than in the past season.
We could see a totally different situation in a couple of weeks if the weather remains as it is - hot, hot, hot.
As for the summer vegetables – prices are higher than a year ago (as expected), and they may actually grow more – even tomatoes are suffering from the heat. So far tomato prices are still going down as the season is just starting, but the trend may change.
However, I we could see a totally different situation in a couple of weeks if the weather remains as it is – hot, hot, hot.
The forecast certainly does not look too good for next 4-5 days. I am going off on a crop tour through Ukraine in a few days. I will get more info out as soon as I see the situation on the ground myself.
Stay tuned.
Andriy Yarmak is an independent agribusiness expert. He has worked on agriculture development issues in 10 world countries, serving as an adviser and independent board members for agribusinesses in Ukraine and has developed market information systems for APK-Inform, a Ukrainian agriculture consultancy. He can be reached at [email protected].
