Newsletter November 2013
This newsletter is being sent out a little later than “normal” due to the fact that we have only now completed the corn harvest, and at the time of writing, the last corn in Oravita is being dried and stored.

The reason for this is that we have had a “peculiar” growing season for corn, and there have been special weather conditions in Romania in general:

We had a very wet spring. Right up until the beginning of April it is was extremely wet, and then it went to the other extreme and we had a heat wave in April, with hot sun and temperatures up to 40 degrees for a period of 20 days.

After this there were more normal temperatures for the time of year, with a little rain. However, June, July and the start August was again extremely dry even though the temperature was relatively normal.

In late summer, there was heavy rainfall again and it rained intermittently in late summer and early autumn, and the temperature was “normal”.

Corn:

In the spring, we had difficultly establishing a proper seedbed: Initially it was very wet, which in itself is a challenge in terms of establishing a proper seedbed and then the sun baked the wet earth crust solid, which also presented great challenges.

The corn was successfully sown almost on time, but the seed placement in the somewhat uneven and bumpy seedbed meant that the plants sprouted very differently, however, it evened out to some extent during the following weeks and months.

The dry summer months then presented new challenges for the corn and the fields that were driest, for example, on hilltops, matured around 1 September, with some modest yields as a result. However, a larger number of other fields benefited from the rain that came rather late and brought “new life” to some of the plants during cob development, but it also meant that the harvest was delayed, because the plants were still green rather late.

The result of the 2300 HA of corn is an average of 4.26 tons per HA, but with big variations from 2.02 to 6.83 tons per HA.

By way of comparison, we can announce that Pioneer’s corn variety trials in Romania produced results from 3.6 to 5.6 tons per HA.

Of course we are continuing with our improvement efforts, and the main focus is on improving yields. Therefore, we have initiated a thorough analysis of the parameters that affect the yields, so that we can identify the causal relationships: variations in yields on fields, early/late varieties, soil preparation, sowing time, 1st year soil, grass-pressure, spraying, etc.

Wheat was harvested with average yields of 5.5 tons per HA on the two eastern sites, Mizil and Videle, and 4.2 tons per HA in Oravita in the west.

This difference was due to the weather in the spring months, in that the overall picture of the wheat was positive after the winter, with a high survival rate.

The weather described above in the spring meant that the wheat was notably stressed during the heat wave in April, before the rain came and it was worst in Oravita.

Rapeseed, the approx. 1200 HA at the three sites gave an average yield of 2.3 tons per HA. The rapeseed also overwintered satisfactory everywhere. However, Oravita, where it was definitely best in the autumn with large mature plants before winter, had the biggest problems in the spring, when the very wet conditions in early spring destroyed much of the root system, however, to a large extent the plants managed to establish new, high-lying roots, so despite everything there was a yield of 2 tons per HA. In Mizil, we were actually in doubt whether the rapeseed would survive the autumn, but the yield here was still average. We had the best rapeseed yields in Videle.

Winter barley totalled 210 HA in Oravita. Here the field was greatly affected by the hot, dry period in April that produced small cobs and a yield of 3.3 tons per HA.

On the positive side, it of course means that the winterkill percent of all the winter crops is very low, just as we avoided the previous season’s problem with the rapeseed drying out in the autumn.

All the winter crops have been harvested dry and they are of a good quality, so they have been put into store without any drying costs. Similarly, a very large part of the wheat is bread wheat quality. Everything is stored in our own facilities.

It has been necessary to dry a large part of the corn in Oravita and Mizil, so our system and processing and storage facilities have proven their value.

Upcoming season:

We have decided to adjust some of the crop distribution, so we:

• Take on a little more winter barley, a total of 786 HA, which will give a risk/opportunity distribution, because we hope to take advantage of the early harvest opportunity before the heat sets in.
• Take on more sunflower, which will give a risk and work distribution, and sunflower is a relatively inexpensive and easy crop, which is considered to have a reasonable potential in terms of yield and sales.
• A reduction in corn HA, but we still believe in the potential of corn and that it should be part of our future crop selection. The crop rotation will be adjusted, because, among other things, we lose the option of treatment with fungicide due to regulatory requirements.
• Sown in the autumn: 786 HA Winter barley, 3270 HA Wheat, 1489 HA Rapeseed.

Crop sales:

The market for the sale of crops in Romania, like the rest of Central Europe, is characterized by low prices. Historically in Romania it is a buyer’s market at harvest and just after, due to storage and liquidity constraints, so we are holding back again on the sale of crops at harvest. We had to sell part of the wheat immediately after harvest at modest prices of just under DKK 100/Hkg. Most recently however, we have seen the price increase to more acceptable levels, and we have sold bread wheat at DKK 134/Hkg and feed wheat at DKK 117/Hkg. Corn has been our big sales challenge in 2013. Hence we had some of the 2012 crop in stock at the beginning of the year and sold small lots at excellent prices. However, the bottom suddenly fell out of the market due to a case of toxins in corn being exported out of the Black Sea, and all dealers in Romania and neighbouring countries lost a lot on corn, and we also ran into sales problems, despite the fact that laboratory tests proved our corn was free of toxins. We have therefore started to sell corn in the region of DKK 95-100 per ton. Serious negotiations are underway to sell at slightly increasing prices in relation to this (all prices are net and collected from the farm).

Result expectations:

Our yields are below budget, but still at a level that crop prices over the coming months will be crucial to how good the final result for 2013 will be.

At the moment there are signals in the Romanian market that players expect prices to rise, which of course there is no guarantee for, but we are certainly very active in the market and trying to sell in this market upward.

Richardt Duus,
CEO