(Boursier.com) — The Group AgroGeneration harvested approximately 5,900 hectares of winter wheat between July and early August 2023. As indicated in previous press releases published by the Group, the harvested area was significantly lower (by more than 60%) than that of the previous year in due to climatic problems during the fall of 2022, followed by the inability to complete the harvest of the late crops of 2022 and, therefore, to execute the winter sowing campaign in the planned areas and in accordance with the technology of production.
In 2023, the net yield of winter wheat increased by more than 30% compared to the same period last year and amounted to around 4 tonnes/ha (compared to 3 tonnes/ha in 2022). According to initial estimates, the total net production of winter wheat amounted to around 23,400 tonnes.
Despite the increase in yield, wheat quality has declined compared to the same period last year, with almost 100% wheat presented as feed grains (compared to around 80% in 2022). Wheat quality deteriorated (as well as throughout Ukraine) due to intense rains preceding the harvest season in June-July 2023 and late execution of the sowing campaign in autumn 2022 due to climatic conditions.
In mid-August 2023, the Group’s farms began harvesting late crops. By the end of September, about 40% of the sunflower area and about 60% of the soybean area had been harvested. The corn harvest has not yet started. Current harvest estimates for late crops remain good, although due to climatic conditions some deterioration in sunflower seed quality (lower oil content) could occur. Completion of the late crop harvest is planned for late October-mid-November 2023 and the corresponding results are planned to be published together with the Group’s 2023 half-year results at the end of November 2023 (refer to “Results half-yearly 2023”).
As of the date of this press release, the Group has already started the 2024 agricultural campaign. In mid-August 2023, in parallel with the harvest of late crops, AgroGeneration began sowing winter crops and preparing the soil for the 2024 harvest. According to current plans, the Group’s farms plan to increase the winter wheat area up to 50% of the Company’s total farm area (up from approximately 20% in 2022).
However, the realization of these plans depends entirely on the progress of the harvest of late crops, which, in turn, is affected by weather conditions and military risks, which remain high in the region where the Group’s farms are located.
Update on crop sales
At the end of September 2023, the Group completed sales of its 2022 harvest and began sales of the 2023 harvest. As of the date of this press release, the Group has sold approximately 40% of winter wheat and 7% of sunflower from the new 2023 harvest. It should be noted that a number of external factors limit the Group’s export potential for the next campaign, including:
On July 17, 2023, Russia withdrew from the “grain agreement” (signed at the end of July 2022 between Ukraine, Turkey, Russia and the United Nations, which allowed cargo ships to circulate safely in the Black Sea) and immediately launched massive missile attacks on port infrastructure in Odesa, Chornomorsk and Mykolaiv. Ukrainian authorities have reported that around 270,000 tonnes of grain were destroyed by Russia in the month following its withdrawal from the “grain deal”. Foreign grain trade remains complicated in Ukraine, as exports by sea through Odesa ports are unlikely to resume in the near future. As of the date of this press release, approximately 3% of the volumes sold from the Group’s 2022 harvest were blocked in the ports of Pivdenny and Odesa.
The situation for other grain export routes from Ukraine also remains difficult. High transport costs, low prices and a lack of available ships make grain trade in the main Danube ports difficult. In addition, Russia continues to attack grain storage facilities at Danube ports.
On May 2, 2023, the EU imposed temporary import restrictions and allowed Poland, Bulgaria, Hungary, Romania and Slovakia to ban domestic sales of wheat, corn, rapeseed and Ukrainian sunflowers. Despite the ban expiring on September 15, 2023, negotiations to ease trade restrictions with the mentioned countries are still ongoing.
In total, the majority of the Group’s 2023 harvest is currently expected to be sold domestically at lower than expected prices.
2023 half-year results
Given the two-month delay in the publication of the Group’s 2022 annual results, caused by the continuation of the Russian military invasion in Ukraine launched in February 2022, AgroGeneration will not be able to meet the deadline for publication. half-year results for 2023 (expected at the end of October). The Company will make its best efforts to publish its half-year results by the end of November 2023, i.e. one month behind the legal deadline.