By Polina Devitt and Pavel Polityuk
MOSCOW/KIEV, June 21 (Reuters) – Russia and Ukraine’s wheat crops will be of lower quality than expected before recent rains, analysts and traders said on Tuesday.
The rainy weather has reduced protein levels in Russian wheat and raised concerns over fungal disease while also reducing the proportion of milling wheat in Ukraine.
The Russian harvest is expected to start in late June or early July and analysts have forecast a record post-Soviet crop. But crop quality in Russia and Ukraine — both major wheat exporters via the Black Sea — is unlikely to be much different from last year, analysts said, adding that the next two weeks’ weather would be crucial.
The harvest starts in the southern regions that this year have raised concerns over the protein content of the new crop and where reports of the fungal disease fusarium are concentrated.
“In percentage terms, there will be less third-class (wheat) than a year ago, but the crop quality will be sufficient for exports,” one Moscow-based trader said
In physical terms, there will be more fourth-class wheat than a year ago and the same amount of third-class, said Igor Pavensky, deputy head of rail infrastructure operator Rusagrotrans and a leading grain market analyst in Moscow.
“There might be problems with the quality at the start of the harvesting, but they should be solved towards August,” Pavenskyi added.
The reports about fusarium are widespread but the fungal decease did not affect exports in 2014, when it was also widespread, and it is unlikely to affect them now, the Moscow-based trader added.
Ukraine, which also starts harvesting in two weeks, will harvest more feed wheat than flagged in early spring forecasts, but analysts said it is likely to be less than a year ago.
“It is hard to estimate the share (of feed wheat) but it will be similar to the previous year. The quality of wheat in our south — the main wheat region — was most affected by rains,” the state weather centre’s Tetyana Adamenko said.
Two Ukraine-focused traders estimated that feed grain will account for 55 percent of Ukraine’s wheat crop this year, compared with 60 percent a year ago.
“The next two weeks will be critical. If rains continue, the share of feed wheat could grow up to 60 percent, but in dry and hot weather the ratio could even be 50-50,” one of them said.
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