Back from the fields: Black Sea crop tour insight – April 2024

The Black Sea region has been one of the most important price makers on the market for many years now.

Today, wheat prices are recovering from multi-year lows, supported by the weather market, geopolitical risks and strong export demand. Market participants are keeping a close eye on crop conditions in the major exporting countries.

Listen to our experts discussing the findings of Argus’ Black Sea crop tour and get exclusive insight on the wheat crop conditions in Russia, Ukraine and Romania in this short podcast.

Related links

More information: Argus AgriMarkets
More information: Argus AgriMarkets Outlook
Request a sample/trial of our price reporting/outlook services
Free sign up: Argus Agriculture Newsletter

Transcript

Hi, and welcome to this Agriculture insight podcast where we analyse the forces shaping the important global agriculture markets. This podcast is produced by Argus Media, a leading provider of commodity market analysis. My name is Antoine Guyon and I'm a consultant for Agriculture. Today we are joined by Angelika Melikian, who's in charge of our Black Sea crop tour programme, to discuss the findings of the Argus April Black Sea crop tour in Ukraine, Russia and Romania.

You can find the results of Angelika's work in our AgriMarkets Outlook report, your reliable weekly and monthly forecasts for the global grains, oilseeds and vegoils markets.

     - Hi Angelika, so, let's start by setting out why it's important to estimate future wheat production in the Black Sea region and what the crop tour programme is in short?

Hi Antoine, The Black Sea region has been one of the most important price makers on the market for many years now. The global grain price trends will be influenced by production and exports from the Black Sea region.

Because of this, we've been organising crop tours in Romania, Ukraine and Russia for several years now. We conduct these crop surveys three times a year: before and after the winter, and then again a few weeks before the harvest, to provide early estimates of regional wheat production.

Today, wheat prices are recovering from multi-year lows, supported by the weather market, geopolitical risks and strong export demand. So, market participants are keeping a close eye on crop conditions in the major exporting countries.

     - Before going into the details about the crop conditions and the weather in the region, Angelika, could you please speak about Argus’ export estimates for Russia and the other countries? 

Yes, it's good to mention exports, and I'm first going to look at the exporting countries in the northern hemisphere. We're forecasting a fall in exports from Europe and Ukraine — I'll explain why later — stable exports from Canada and a slight increase for the US. We estimate Russian exports in the next season in line with the two previous seasons’ high volumes, as of today. But all in all, the northern hemisphere export availability is tightening in 2024-25.

When we talk about the top-six exporting countries, Russia’s exports share could be as high as 30pc. So, weather risks in Russia are important to monitor, especially since the country is experiencing a dry spell right now.

     - Can you talk more about these weather problems? Russia is a big country and we get a bit lost between the floods in the Volga region and the dry weather…

The country is big. You mentioned the areas that have been under water in recent weeks, in particular Orenburg. All these regions that have been flooded, are on the border with Kazakhstan.

But the impact on wheat sowings appears to be limited. These regions have more spring wheat than winter wheat. And spring wheat plantings usually begin at the end of April/early May. 

Now, let's move on to the south of Russia. And it's something like 2,000km between Orenburg and Krasnodar.

In the south, unusually dry and hot weather is creating risks for the crop. 

What we are hearing from farmers and contacts in the region is that rainfall has been too limited since February. In April, some fields received just 10mm of rain, and for others — no rain at all.

The rainfall remains insufficient in the face of hot winds, which are rapidly drying out the soil. And temperatures are higher than normal. 

     - Ok, and what about the good NDVI for the region?

The NDVI is good, as were the wheat conditions at the beginning of April when we did our crop tour. 

There was plenty of rain in late autumn 2023 and early winter. It helped to replenish the soil moisture reserves.

The wheat has developed well and showing a nice green field. But as long as the plants don't form sufficient number of spikes with the grains, it's just green grass.

Local agronomists estimate that each additional week without rain means a loss of 5pc of lateral sprouts (called tillers) at the beginning, and then 10pc, 15pc and so on. 

So there is a risk that yields will fall rapidly. And lower Russian production, around or below 90mn t, could provide support to global wheat markets.

In the central regions, the Urals and southern Siberia, conditions for sowing spring wheat are good for now. There's still some time to go before the harvest. And we'll do our field survey again in June.

     - Thank you for this comment. It has now become more clear what's going on in Russia. Let's move on to Ukraine. What are the conditions there for wheat?

We have also estimated wheat production in Ukraine. The country is one of the world's top eight wheat exporting regions.

In Ukraine, the geopolitical situation is making it difficult but also very important to forecast wheat production. 

Weather conditions have been favourable for the development of wheat since plantings last fall. It’s only in the east of the country that we see a lack of rain.

As a result, we can expect today yields at 4.6 t/hectare, above the five-year average.

But the total wheat production in the 2024-25 season is likely to decline in Ukraine to less than 20mn t because of lower planting areas. 

It means that the Ukrainian origin will be less present in the new marketing year. We estimate that the total exportable volume from Ukraine will drop to 13.5mn t, down from 17.5mn t last marketing year.

     - We’ve got a little time left to talk about the third country in the Argus crop tour programme, Romania.

In Romania the conditions are also dry, just like in southern Russia.

But I would say that the production risks are even higher there. Unlike in Russia, autumn sowing has started in dry conditions in Romania and soil moisture levels are more depleted. 

That said, the good rains in February-March helped the winter crops develop sufficiently. And we estimated 2024-25 wheat production in Romania at 10.6mn t a few weeks ago, in line with last season production. Areas are expected to be higher than last year, but the yield could fall sharply if weather remains dry over the coming weeks.

Not a lot of rain was forecast in April-May, so we are more likely to revise down our production figure in the third and final crop tour report in June, but for now we are not looking at a repeat of the 2020 scenario, when drought cut wheat production to its lowest level in eight years. 

     - Thank you very much Angelika for joining me today to discuss this interesting topic. We will continue to closely watch the situation in the Black Sea region since many uncertainties are mounting in recent weeks. 

      Thank you all for listening to us. 

      For all analysis, grain and oilseeds market insights, prices and crop tours updates, make sure to check out our AgriMarkets services: daily, weekly and monthly reports. We will be back next time with more interesting topics shaping and moving global agriculture market trends.