Weather is the way to understand how the farmers may be planning their business of spring planting by late February – early March in the eastern Europe and European territories of postSoviet regime. And if people make wonder why domestic prices find its way higher while no international support is around, the response lies within the action of weather.
So what was the weather like and remains? In general it is positive for winter crops, which would make farmers more relaxed. It is freezing, snow is in the fields and while the road transportation is slowed by icy conditions, the agri-weather may be considered as positive.
Easter, and it is before Easter holidays the farmers normally intend to plant good portion of the spring grains, oilseeds and pulses (almost everything except for sunflowers, maize and sorghum) falls to April 28-29 in Ukraine, while in Romania it falls to April 21 (as they celebrate it in accordance with new-Julian calendar, not the old one that is used yet among the clerics and their pastries in the post-Soviet territories) permits the farmers to do their job without hurry like it was in a year of 2018 for example. Besides that, the recent development in crude oil prices let the farmers an opportunity to take their diesel fuel cheaper. So the large farmers would normally hold their grains until they sense the price is good enough for them to sell.
Small and medium size farms are either empty already or hold smaller amounts of grains that they may and would possibly liquidate later during the month of February when they are to purchase agro-chemicals and fertilizers prior the spring planting campaign starts in their region(s).
Large farmers may be relaxed for longer term that any logic may suggest is correct or wrong!
However, normal way of action is dependent from the weather again as they (large farmers) own a good bank of seeds and should the weather makes it impossible to plant one variety of grains on timely fashion, but would permit to plant the different one later, the farmers may change their mind and sell the stock of their seeds unused as a commodity, while take the other seeds into rotation. But that’s all “if/when”…the tradition is set up by ages: large farmers are the conservators. They were caught many times at the situation when “selling too fast makes smaller revenues as price grows” and they, knowing nothing or very little about what happens in Brazil or USA or China…remain at the physical market, which is FULL with the paradoxes.
Short covering in the large ports, thanks for bad weather again…sudden collapse or withdrawal of one or two big players from the market, which permits the other players to compete more aggressively…freight, currency, interest change, election surprises….every little or big item has its’ effect and traders, who are framed with the contract shipping terms must buy, collect and deliver further. So the large farmers would normally sell good quantities of their agris just after the spring planting campaign is over. Smaller farmers may not have that stamina of waiting …
This helps to understand why weather, slow transportation and absence of active agronomic actions at the certain period of time, create the paradox when local prices firm up thanks to short traders in the port and international prices soft. It’s time when South America sells new crops, so Australia does.
Besides usual weather factors, there are political actions that do also have their powerful effects. Ukraine has the presidential elections on March. Moldova has the parliamentary elections on February. Romanian presidential elections are due on the end of the year, by
November 2019. Besides that, there is election rally in India, who remains the great producer and the buyer too, which are due on by March 2019. So, politically, the weather promises to be HOT in the Eastern Europe and post-Soviet territories. And however, it makes no direct effect to the business, but in the country like Ukraine is – it makes the side effects that bring the heavy repercussions, but that’s the subject of the last chapter.