Gro Intelligence’s Ukraine winter wheat model is pointing to below-normal yield in 2020, as hot and dry planting conditions got the crop off to a difficult start.
Gro’s Ukraine model is currently indicating yield of 4.05 tonnes per hectare, which is nearly 5% below the yield trend for the past 20 years of 4.25 tonnes/hectare, and is down 7% from the 2019 crop. Planting got off to a slow start, and initial reports pegged Ukraine’s winter wheat acreage at around 5.9 million hectares, a 16% area decline from 2019. But updated data from UKRSTAT, the Ukraine government’s agricultural data service, shows wheat acreage of about 6.4 million hectares, comparable with recent years.
Assuming the Gro yield estimate remains unchanged, Ukraine’s final winter wheat production would be roughly 25 million tonnes. That would be down from a record 29 million tonnes estimated by the USDA for 2019, and about the same as the 2018 harvest. Winter wheat represents roughly 97% of Ukraine’s total annual wheat production.
For neighboring Russia, Gro’s winter wheat model currently projects yield of 3.66 tonnes per hectare, which is consistent with the 20-year trend. An estimated 6% increase in area planted, to 16.7 million hectares, could bring production to 60.29 million tonnes. Winter wheat represents about 70% of Russia’s total wheat crop, with the rest coming from spring wheat.
Gro’s also combines its Ukraine and Russia models into a single Black Sea region winter wheat yield model. This is currently showing a combined yield for the two countries of 3.70 tonnes per hectare, down nearly 4% from a 20-year trend of 3.85 tonnes per hectare.
The Gro models went live as the planting season in the region got underway in September. The crops are now dormant until the growing season resumes between mid-March and mid-April. But the yield models continue to update daily, and can still be affected by model variables such as soil moisture and temperature.
There is concern that early-season low soil moisture in some areas has left much of the now-dormant wheat crop in poor condition as it headed into the winter months. In addition, there has been little snowfall across the Black Sea region so far this year. Snowfall is important to winter wheat because it insulates the dormant wheat from low temperatures, which can cause winterkill of dormant seedlings.
Amid concerns about the Black Sea wheat crops, especially Ukraine, and a further decline in winter wheat planted area in the United States, wheat export prices have risen in recent weeks, International Grains Council (IGC) price data shows. In addition, Ukraine removed its cap on wheat exports and says it will now monitor markets monthly to protect domestic supply. Ukraine wheat exports have jumped in the 2019/20 marketing year to record highs (see chart below). Given the uncertainty surrounding Ukraine’s crop, however, the country will be hard pressed to maintain such an export pace.