Kernel Holdings took a cautious view of Ukraine's grain export potential for the 2013/14 season as it unveiled a fall in profits in the first quarter, attributed to lower bulk oil and grain sales.

"We estimate grain export potential of Ukraine in the range of 25-27m tons," the Kiev, Ukraine-based company reported.

The forecast however is somewhat below those of the US Department of Agriculture and is little changed from current estimates from Ukraine's Agriculture Ministry, which estimates exports totalling 24.4m tonnes for the current season.

Recent forecasts from the USDA place Ukraine's exports under the 2013/14 season at 28.18m tonnes.

'Successful' sowing

Kernel's farming division reported its spring sowing campaign was successfully completed in May.

"Both winter and spring crops are in good condition with favourable weather patterns observed during the spring sowing campaign," reported the group.

Recent reports from USDA echoed the sentiment.  "Winter wheat plantings were almost unaffected by winter kill and thus overall wheat area could be almost 20% higher than in the previous season."

USDA did however caution "If the Government of Ukraine does not restrict grain exports."

Previously the government has signed Memorandum of Understanding, outlining export quantities that can be exported without any restrictions.  The MoU's are designed to allow Ukraine's government to monitor and possible control the volumes of grain exports with the objective of 'regulating the domestic market prices and ensure food security'.

Corn popularity

Kernel also reported a shift in the group's crop structure, favouring corn, with planting accounting for 42% of the 2014 crop share.

The increasing popularity of corn amongst Ukraine farmers was recently noted by the USDA, which it attributed to its, "attractive profitability and it ability to replace other crops that might suffer winter kill."

By contrast Kernel again reported minimum sugar sales over the quarter owing to "depressed domestic sugar price environment" caused by two consecutive years of the sugar overproduction in Ukraine together with limited export opportunities.

However the group reported a four-fold increase in revenues from the sugar sector owing to the sale of its Chortkiv sugar plant property for a gross consideration of $32.5m.

Landbank growth

In addition the group continued with its programme of optimizing its landbank.

Kernel added 1,500 hectares of land in Khmelnytsk over the quarter while divesting 6,000 hectares remotely located land in southern Ukraine in April 2013

In April, Kernel entered into a deal to acquire an 80% interest in a farming business that manages

108,000 hectares of leasehold farmland and operates 100,000 tonnes of grain storage capacity.

Shares in the group stood down over 4% in European trading, standing at E13.24 per share at the time of writing.

agrimoney.com